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The Best Options Trading Selling Strategies

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  • The Best Options Trading Selling Strategies

    Though trading options is considered risky, savvy options traders have learned that they can be profitable if they learn more about options trading selling strategies. Options sellers seem to be more profitable than other traders. However, the amount of knowledge needed as well as capital requirements keeps many traders from options trading selling strategies.

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    Options trades has been considered the domain of risk takers. However, there are many options selling trading strategies that can minimize the risks. This in no way reduces the possible returns in options trading especially considering the fact that you do not need to spend too much time setting up options trades. The fact that one can not only profit from the movement in the stock but also gain by receiving a consistent monthly income makes these strategies very attractive.

    Using Covered Calls is among the most utilized options trading selling strategies. This is where you hold a long position in a stock as you sell or write call options on the same stock. You are basically hedging your trade especially when you doubt the likelihood of your stock rising. The premium from your option may end up to be enough for you to profit from the trade. In this case, if the price of the stock goes up, you profit from the rise in the price. If it falls however, you profit from the premium you were paid.

    If you are conservative in your trading, then selling Credit Spreads is an options trading strategy you should consider. With this strategy, it is possible to consistently earn a set profit rate each and every month. Many practitioners of this options trading strategy aim for between 10 and 15% monthly.

    In a stock market that is trending up, selling naked puts is one of the most profitable options trading selling strategies. Though it has a fairly higher margin requirement than that of credit spreads, the risk profile is just as low. The important thing is that you earn your income upfront when setting up the options trade. This makes it very attractive especially for those who would like to use options to earn a consistent income.

    For those looking for swing options trading strategies, then selling deep in the money options is a good option. It enables you to in effect purchase stocks at approximately one-half their price, and possibly doubling your earnings. These trades are ordinarily between 3-10 days reducing your risks in holding on to the stock. You will potentially profit since the price change of the options that you bought is precisely matched by the price change of the shares.

    It is very easy to get caught up in the various types of options trades. For this reason it is important to be disciplined enough to the winning strategy. It has been shown that options trading is risky but these risks can be minimized by following well thought out options trading selling strategies and sticking to them. In short, you should have your own strategy, know it well, and use it consistently.

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