Quick Verdict: The Most Successful Options Strategy
What is the best options trading strategy? The most successful options trading strategy is the "Financed Bull." This involves buying a call debit spread to capture upside potential and financing the cost by selling out-of-the-money (OTM) naked puts on high-quality stocks. This mathematically sound approach defines your risk, drastically reduces your cost basis, and has allowed disciplined traders to win up to 98% of their trades.
My Verified Multi-Year Trading Results
I don't ask you to trust my strategy without proof. My two real E*TRADE trading accounts produced the following returns across two different market environments:
| Year | Smaller Account | Larger Account | Market Environment |
|---|---|---|---|
| 2023 | +138% | +35% | AI boom, sustained tech rally |
| 2025 (May–Mar 2026) | ~+78% (11 months) | ~+63% (12 months) | Mixed environment with two small drawdown months |
Full verified E*TRADE statements will be published at beststockstrategy.com/results in May 2026.
For the complete monthly breakdown, see Can You Make a Living Selling Options?.
What Makes an Options Strategy "Successful"?
Before diving into specific strategies, it's important to define what "successful" actually means. A successful options trading strategy isn't just about one big win — it's about a repeatable process with a high probability of profit, clearly defined risk, and the ability to perform across different market conditions.
Many traders chase the "next hot trade" or rely on chart patterns that don't work (read my thoughts on day trading and technical analysis scams). Instead, the strategies I teach are grounded in mathematical probability and real risk management.
Here's how the three core strategies I recommend compare to popular alternatives:
| Criteria | The "Financed Bull" | Wheel Strategy | Iron Condor | Covered Calls |
|---|---|---|---|---|
| Win Rate | Very High (Up to ~98%) | Moderate | Moderate–High | Moderate |
| Upside Potential | Significant (via call spreads) | Capped | Capped | Capped |
| Capital Required | Low (financed by puts) | High | Moderate | Very High |
| Downside Protection | Defined risk on calls | Undefined on puts | Defined | Minimal |
| Active Management | Low | Moderate | Moderate | Moderate |
The strategies below are listed in order of importance. When used together, they form a complete, all-weather trading system.
Strategy #1 — The "Financed Bull" Strategy (Financed Call Spreads)
The cornerstone of everything I teach is the Financed Bull Strategy. This is my proprietary approach to participating in stock market upside while keeping risk tightly controlled.
Most traders either buy options (which expire worthless the majority of the time) or sell options (which caps their upside). The Financed Bull does something different — it combines both into a single, elegant position.
How the Financed Bull Works (Step-by-Step)
- Identify a high-quality stock you're bullish on — large-cap, fundamentally strong companies with consistent earnings.
- Buy a call debit spread — purchase a call option at one strike and sell a call at a higher strike. This defines your maximum risk and gives you upside participation.
- Finance the cost by selling a naked put — sell an out-of-the-money put on the same (or another quality) stock. The premium collected from the put offsets (or completely covers) the cost of your call spread.
- Result: You now have upside exposure for little to no net cost, with defined risk on the call side and a willingness to own the stock at a lower price on the put side.
Real Example With Numbers
Let's say you're bullish on Microsoft (MSFT), currently trading around $420.
- Buy the MSFT $420/$450 call spread (3-month expiration) for approximately $8.00 debit
- Sell a MSFT $380 put (same expiration) for approximately $8.00 credit
- Net cost: $0.00 (the put premium finances the call spread entirely)
- Maximum profit: $30.00 (the width of the call spread) if MSFT is above $450 at expiration
- Risk on the put side: You'd be obligated to buy MSFT at $380 — a price that represents an approximately 10% discount to the current price of a world-class company
This is why I call it the "Financed Bull" — you get bull market upside for free by being willing to own great stocks at lower prices.
When to Use This Strategy
The Financed Bull works best when:
- You have a moderately bullish outlook on a specific stock or the market
- Implied volatility is moderate to high (so you collect more put premium)
- You genuinely want to own the underlying stock if it drops to the put strike price
I've found better results using the Financed Bull Strategy — buying call spreads and then financing the call debit with naked puts — than simply buying calls outright or using the tired "wheel strategy" that so many gurus promote.
For a deeper dive into profitability, read our full breakdown: Can You Make a Million Dollars Trading Options?
Strategy #2 — Selling Naked Puts & Taking Ownership
The second most successful strategy is selling naked puts on stocks you'd be happy to own at a lower price, and then taking assignment when the opportunity arises.
When you sell a put option, you're essentially getting paid to agree to buy a stock at a price lower than today's market price. If the stock stays above your strike price, the option expires worthless and you keep the premium — that's a win. If the stock drops below your strike, you buy the stock at an even better price, with a cost basis further reduced by the premium you collected — and that's also a great outcome.
Selling Puts Example
Suppose Amazon (AMZN) is trading at $200. You sell a $185 put expiring in 45 days and collect $4.00 in premium.
- If AMZN stays above $185: You keep the $4.00 premium. Win rate on OTM put selling is historically very high.
- If AMZN drops below $185: You buy AMZN at an effective price of $181 ($185 strike minus $4 premium) — a 9.5% discount to where it was trading when you placed the trade.
How Put Premium Finances Your Call Spreads
This is where Strategies #1 and #2 work together beautifully. The premium you collect from selling puts can be used to finance the call debit spreads in the Financed Bull Strategy. You're getting paid to enter a position you'd want to own anyway, and simultaneously using that income to buy upside exposure.
This is the mathematical edge that separates consistently profitable traders from everyone else.
For more on how to select the right stocks for this approach, see our guide on the best stocks for options trading.
Also, learn about delta selection when trading options.
Strategy #3 — Buying Options as a Portfolio Hedge
The third strategy is often overlooked but critically important: buying put options as a hedge when volatility is cheap.
While I primarily teach selling options for premium income, there are times when buying options makes perfect sense — specifically as insurance for your portfolio.
When to Buy Puts (Low VIX Environments)
When the VIX (Volatility Index) is low — typically below 14–16 — option premiums are cheap. This is the ideal time to buy put options on the S&P 500 index or individual stocks as a hedge against a market correction.
Think of it like buying homeowner's insurance. You don't buy fire insurance when the house is already burning (when VIX is at 30+). You buy it when everything is calm and premiums are low.
If a correction does occur, your puts increase dramatically in value, offsetting losses in the rest of your portfolio. This is how you protect the wealth you've built from Strategies #1 and #2.
Also, if you make money on your Index options long puts, then you'll receive favorable Section 1256 tax treatment — 60% long-term / 40% short-term blended rates regardless of holding period.
Best Options Strategy for Bear Markets
In a bear market, most traders panic. But if you've been buying cheap hedges during calm periods (Strategy #3), you're already protected.
Beyond hedging, bear markets are excellent environments for:
- Buying put debit spreads — the bearish equivalent of a call spread, allowing you to profit from further downside with defined risk
- Selling puts at even deeper out-of-the-money strikes — bear markets create elevated volatility, meaning you get paid significantly more premium while setting strike prices far below the current market price
- Aggressive deployment of the Financed Bull — after major corrections, buying call spreads on quality companies at depressed prices creates extraordinary upside potential
The key is having a plan before the bear market arrives. To learn more about which approaches work best in different market conditions, read Which Trading Strategy Is Best?
Best Options Strategy for Sideways Markets
Sideways markets frustrate directional traders, but they are ideal for options sellers. When the market chops back and forth without trending, time decay (theta) is your best friend.
The best strategies for sideways markets include:
- Selling iron condors — selling both an OTM put spread and an OTM call spread simultaneously, profiting as long as the stock stays within a range
- Selling OTM strangles — collecting premium on both sides of the market
- 0DTE and 1DTE premium selling on SPX — for traders who want to profit from sideways price action on a daily basis, short-dated premium selling is extremely effective
For a complete breakdown of how to trade 0DTE and 1DTE options for daily income, see our 0DTE Options Trading Guide.
Why Covered Calls and the Wheel Strategy Underperform
I know this is a controversial opinion, but the data backs it up: covered call strategies and the "wheel strategy" consistently underperform the overall market on a total return basis.
Every single covered call ETF — including popular funds like QYLD, XYLD, and JEPI — has dramatically underperformed the S&P 500 over any multi-year period.
Covered call ETFs consistently underperform not only in rising markets due to capped upside, but also during market declines (Source).
In 2023 and 2024, these ETFs struggled as equities rallied, and their total return since 2020 lags the S&P 500 by 32% (Source).
Why? Because covered calls cap your upside.
The strategy caps potential gains, causing underperformance in strong bull markets. You collect a small premium but give up the biggest gains. Over time, this adds up to massive underperformance. (Source)
The Financed Bull Strategy solves this problem. Instead of capping your upside by selling calls against shares you own, you keep your upside exposure through call spreads and generate income by selling puts. You get the best of both worlds.
For more data on covered call underperformance, see this analysis from Seeking Alpha.
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The Ultimate Combo: The Financed Bull + 0DTE Income
For traders who want to build long-term wealth AND generate consistent short-term income, the most powerful approach combines both strategies:
- Long-term positions: Use the Financed Bull Strategy to build call spread positions on quality stocks, financed by selling naked puts. These are multi-week or multi-month positions.
- Short-term income: Sell 0DTE or 1DTE out-of-the-money strangles on SPX for daily premium collection. These positions open and close within hours or a single day.
The 0DTE income provides a steady cash flow stream while the Financed Bull positions capture significant upside over time. Together, they create a complete, all-weather trading system.
Learn the exact mechanics in our 0DTE & 1DTE Options Trading Guide.
Risk Management Rules for Options Traders
No strategy works without proper risk management. Here are the rules I follow and teach:
- Position sizing: Never risk more than 3–5% of your portfolio on a single position
- Diversify across tickers: Don't concentrate all your put sales on one stock
- Use stop-loss discipline: For 0DTE/1DTE trades, use a strict 4x stop-loss (if you collect $1 in premium, your max loss is $4)
- Buy hedges when they're cheap: When VIX is low, buy portfolio protection (Strategy #3)
- Only sell puts on stocks you'd own: If you wouldn't buy the stock outright, don't sell puts on it
- Keep cash reserves: Always have cash available to take assignment and manage positions through volatility
These rules are what separate gambling from a real trading strategy. To get real-time guidance on which trades to take, check out our options trading signals and alerts.
Stop Gambling. Start Winning.
Learn the "Financed Bull" Strategy that has produced a win rate up to 98%. Protect your capital. Collect premium. Participate in the upside.
FAQ — Most Successful Options Trading Strategies
What is the most successful options trading strategy?
The most successful options trading strategy is the "Financed Bull" Strategy. This involves buying call debit spreads on stocks you're bullish on and financing the cost by selling out-of-the-money naked puts. This approach defines your risk, reduces your cost basis, and has produced a win rate up to 98%. Learn how to get started.
Can you make a living trading options?
Yes, with a disciplined, high-probability strategy and proper risk management. Many of David Jaffee's 2,500+ students trade options as a primary or supplemental income source. Read our full breakdown: Can You Make a Million Dollars Trading Options?
Is selling options more profitable than buying options?
Selling options has a higher probability of profit because time decay (theta) works in the seller's favor. However, the most profitable approach is combining both — selling puts to generate income while buying call spreads for upside participation. That's the core of the Financed Bull Strategy.
What options strategy has the highest win rate?
Selling out-of-the-money options has the highest win rate because the option only becomes a loss if the stock moves significantly against you before expiration. David Jaffee's approach — selling OTM puts on fundamentally strong companies — has achieved up to a 98% win rate.
What is the Financed Bull Strategy?
The Financed Bull Strategy involves buying a call debit spread on a stock you're bullish on and financing the cost by selling a naked put. This creates upside participation at little or no net cost while maintaining defined risk on the call side. If the put is assigned, you own a great stock at a discounted price.
Why are covered calls and the wheel strategy bad?
Covered calls and the wheel strategy cap your upside potential. Every single covered call ETF has dramatically underperformed the S&P 500 over multi-year periods. Instead of capping gains, the Financed Bull Strategy uses call spreads for upside exposure and put selling for income — giving you the best of both worlds.
Explore all of our options trading strategies.