The Top 3 Most Successful Options Trading Strategies (Guide)

The Top 3 Most Successful Options Trading Strategies (Guide)

Looking for the  most successful options trading strategies for traders to make consistent profits?

This post has you covered! 

While I primary used to only focus on selling option premium, I believe that the 3 most successful options trading strategies are:

  1. 1
    Buying call spreads
  2. 2
    Running the wheel strategy
  3. 3
    1 DTE trades using SPX

Let's discuss each of these in more detail!

1. Buying Call Spreads

The market has a bullish bias.

While collecting option premium is great, I've found better results by buying call spreads and then financing the call debit with naked puts or put credit spreads.

The reason this works so well is that you're frequently able to capture ~$10 worth of upside potential for $2 - $3.

Then, I finance this $2 - $3 by selling puts on amazing companies that I want to own.

Especially for long-term bullish, or bearish, directional trades, the options market is typically very inaccurate when pricing long-term option prices.

If you put on a trade during a period of low volatility, then the debit you'll pay will be far less than when volatility is high.

I use this structure frequently, and I also use it on the bearish side as well as a hedge.

The most important thing to be concerned about is large spikes in volatility, especially if you have naked short puts with long durations.

The best way to prevent these short puts with long durations from hurting you, it's best to include a few hedges in your portfolio.

2. Running the wheel strategy

The wheel strategy is a great way to collect premium, get assigned the shares, participate in the upside of the stock and also collect additional premium by selling out of the money calls.

The wheel is a simple strategy that allows you to "dollar cost average" into your favorite securities!

3. 1 DTE trades using SPX

This is primarily a large account trading strategy.

We trade 1 DTE on the SPX. In the 1+ years that we've traded it, we've only had 3 losing trades and have netted around $50,000 in profits.

We prefer SPX, over SPY, because SPX is a 1256 Cash Settled option - so it receives beneficial tax treatment in the United States.

Most Successful Options Trading Strategies for Beginners

The most successful options trading strategy for beginners is probably running the wheel strategy of the SPY or QQQ index.

To start running the wheel, traders will sell an out-of-the-money "OTM" put option at a strike price where they would like to take ownership of the stock.

They'll continue to sell OTM put options until they're assigned, then they'll sell short-dated (1 or 2 weeks) call options until the stock is called away - then they'll restart the wheel strategy by selling an OTM put.

Alternatively, beginning traders can also sell vertical credit spreads on securities that they feel are oversold.

The issue with solely relying on this strategy is that they likely won't collect a lot of option premium, however this is still a solid strategy for beginners to learn how to trade options.

Traders can combine selling vertical credit spreads with the wheel strategy as well.

It's very important, when selling options, to not trade too large because, during a market crash, you don't want to run out of buying power and be forced to lose out positions at an inopportune time.

Become a Successful & Profitable Trader with our Trade Alerts Special Offer

Best Option Strategies with Examples

For an example of the most successful options strategies

Buying call spreads:

Let's say that you're bullish on XYZ stock but you don't want to own stock because you're concerned about the downside risk and you also don't like how holding shares of stock use up a lot of your available buying power.

If XYZ is trading at $100 you believe it's best to buy a $120 call and then sell a $140 call with an expiration of 1 year from now.

Buying this $20 wide call spread costs you $600 for every contract (which is your maximum loss).

Your maximum gain is $1,400 per contract ($2,000 less the $600 initial cost) and you'll realize this gain if XYZ is trading above $140 when the option expires.

Running the wheel

Let's say that you'd like to own XYZ but you don't want to purchase shares at this moment.

You could sell an OTM put option on XYZ that's ~10% below the current market price so that you collect premium on the security.

If XYZ is trading at $100, then you can sell a $90 strike with an expiration of 30 days and you'll collect $1.50 of premium per share (or $150 per contract).

If, in one month, XYZ is trading above $90 / share then you'll keep the $1.50 / share and re-sell an OTM put option.

If XYZ is trading below $90, then you'll get assigned at $90 and then you can sell short-dated calls against the long shares.

For example, you can sell call options that expire in 1 or 2 weeks with strike prices that are $5 or $6 above the current market price.

If the underlying security doesn't close above the call strike upon expiration, then you'll keep the premium you received when selling the call options.

If the underlying security expires above the call strike, then your shares will be called away, or sold, at the call strike and you'll also keep the premium you received when selling the call options!

Now you can restart the wheel by selling an OTM put!

Become a Successful & Profitable Trader

Follow My Trades with Real-Time Trade Alerts

Frequently Asked Questions (FAQs)

What is the best stock strategy? 

The best stock strategy is buy call spreads on stocks that you're bullish on.

You can also run the wheel option trading strategy and trade 1 DTE trades in SPX or SPY.

You can also proactively hedge your portfolio during periods when volatility is low in order to reduce overall portfolio volatility.

Is there a guaranteed profit option strategy? 

There is not a guaranteed profit option strategy, however you can sell put options on market-leading stocks and then take ownership after these stocks have dropped 15% - 20%.

Then, you can participate in the upside of the stock and run the wheel.

Additionally, by buying options during periods of high complacency, you can decrease portfolio volatility while also making money during a stock market crash.

What is the most successful options strategy?

Sell put options on market-leading stocks, with strong brands, and then take ownership after these stocks have dropped 15% - 20%.

Then, you can participate in the upside of the stock.

Also, participating in the upside of stocks by purchasing call spreads is also a great way to profit in the stock market while also minimizing risk.

What are 10 Options Trading Strategies Every Investor / Trader Should Know?

There aren't ten, but there are definitely a few important ones:

1) Buying call spreads to participate in the upside of securities

2) Selling naked options and then taking ownership to participate in the upside while also running the wheel strategy

3) Trading 0 DTE and 1 DTE

4) Selling vertical credit spreads

5) Buying puts to protect your portfolio against volatility expansion

About the Author David Jaffee

I (David Jaffee) help people become consistently profitable traders while minimizing risk. Learn more about our live trade alerts and courses. I graduated from an Ivy League University and worked at some of Wall Street's most successful investment banks. Subscribe to my YouTube channel for valuable videos - BestStockStrategy YouTube Channelโ€‹. My personal website is DavidJaffee.com.

follow me on:

Leave a Comment:

35 comments
Jeff chan says October 14, 2020

if we think the market is going up, why vertical put credit, we can just use call option??

Reply
    David Jaffee says October 14, 2020

    it’s the difference in probability of profit. With a call, you have to be right directionally and the magnitude of the move has to exceed the premium that you pay. When selling a put, you can win if the stock goes up, stays the same or even if it goes down a bit. Plus, you COLLECT premium vs pay premium. It’s the difference of being the casino vs. being a gambler.

    Reply
Great blog! says August 26, 2020

I do not even know the way I stopped up here, however I thought this
put up used to be good. I don’t recognise who you’re but definitely you’re going
to a famous blogger in the event you aren’t already. Cheers!

Reply
Celebrities Deaths says August 25, 2020

Definitely imagine that that you said. Your favourite justification appeared to
be on the web the simplest thing to have in mind of. I say
to you, I definitely get irked at the same time as other folks consider concerns that they plainly don’t realize
about. You controlled to hit the nail upon the highest as smartly as defined out the whole thing with no need side effect , folks can take a signal.
Will probably be back to get more. Thank you

Reply
MARKET NEWS says August 21, 2020

Today, while I was at work, my sister stole my apple ipad
and tested to see if it can survive a forty foot drop, just so she can be a youtube sensation. My apple ipad is now broken and she has 83 views.
I know this is entirely off topic but I had to share it with someone!

Reply
Galen Homer says June 15, 2020

The self education industry is a $355 Million per day industry and is expected to TRIPLE in the next 5 years! And with the right strategy this could be your opportunity to:

Get in early before it is oversaturated.
Help others go faster while you get paid
Fix a broken system
Make an impact on the world
Get paid for a skill, hobby, passion or expertise you already have (or get paid from someone elseโ€™s)

And Tony Robbins, Russell Brunson and Dean Graziosi are finally going to show YOU how to take advantage of itโ€ฆ

(Now if you donโ€™t already know who these 3 guys are then youโ€™ll want to listen up!! Theyโ€™ve impacted millions of lives and have generated billions of dollars)

Look, if youโ€™ve ever thought about (or even if you never thought about) getting paid for something you know (like a passion or a skill)… or even getting paid from what others know, then you have to attend.

This is one of the fastest growing industries online and in all areas of the world.

And for the first time ever theyโ€™re doing a webclass training on how to extract your wisdom (or somebody elseโ€™s) and get other people to pay you for it!

You can save your spot here (and when you do register, youโ€™re immediately going to get a brand new, never before seen training from Tony and Dean. No one else will ever get a chance to see this rare training except for us).

After hearing what theyโ€™re teaching, I truly believe this is the #1 way to make a massive income, make a massive impact on the world and leave a legacy!

And hereโ€™s just a fraction of what youโ€™ll learn this week:

The mostly hidden $129 Billion dollar market and how you can make a massive impact and leave a legacy by profiting from it.

The KBB Triangle: The 3 ways to profit (whether youโ€™re an expert with a thriving business, just getting started, or even if youโ€™re at complete rock bottom)

The framework to profit from what you (or someone else) already knows – or by creating community and bringing people together.

Plus youโ€™ll even be able to ask them questions when they do Q&A at the end of the training. (Chat is limited so show up early).

Thereโ€™s no other time where youโ€™re going to have this opportunity. So BE THERE! Because if youโ€™re not going to make a shift in your life now, then when? And if not with these guys, then let me ask with who?

This is your rare chance to learn from 3 people who started from nothing and went on to generate billions of dollars and build massive companies.

Spots are filling up faster than they ever have, so you need to hurry and go here to save your spot

Register now and Iโ€™ll see you there this week – Plus they did a few brand new โ€œpre-eventโ€ trainings that only those who register get access to.

Talk soon

Reply
Rita says April 16, 2020

It’s actually a cool and helpful piece of info. I am satisfied that you simply shared this helpful info with us.
Please stay us up to date like this. Thanks for sharing.

Reply
AffiliateLabz says February 15, 2020

Great content! Super high-quality! Keep it up! ๐Ÿ™‚

Reply
finance after brexit says January 25, 2020

Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my
blog that automatically tweet my newest twitter updates.
I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have
some experience with something like this. Please let me know if you run into anything.
I truly enjoy reading your blog and I look forward to your new updates.

Reply
Robert says January 24, 2020

Awesome post! Keep up the great work! ๐Ÿ™‚

Reply
Thomas Rotrem says January 17, 2020

Really Appreciate this blog post, can you make it so I receive an email sent to me every time you write a new article?

Reply
Kendall Blankship says December 18, 2019

I like Your Site

Reply
    David Jaffee says December 18, 2019

    Thanks

    Reply
Arline says June 29, 2019

After reading your blog post, I have a special offer for you, build your successful business with our company. it’s helpful for any type of website and business. vary cheap then another else offer. so, what are you waiting for? Keep up the quality posts

Reply
stafabandb says May 9, 2019

Like a Newbie, Iโ€™m always researching online for articles which will help me get further ahead.

Reply
OMNIEQ says April 30, 2019

If you’re looking for vertical credit spread opportunities, we have a real-time scanner: xxxxxxx

Reply
    David Jaffee says May 1, 2019

    ok

    Reply
Noel Dsylva says April 6, 2019

Hi David, I am Noel would be interested in learning trading options, I stay in Dubai and work in a cyber cafe and now I plan to move to India after a year, would like to know if you can mentor me with your trading plans and strategies.

Reply
Sophia says April 2, 2019

Hi David! Cool Stuff and just like the rest of the gang here. I am interested to know how you do it in more details like a video or something. Please shoot me an email and looking forward to learn more from the master.

Reply
    David Jaffee says April 2, 2019

    Thanks

    Reply
Ok says March 17, 2019

Aw, it was a very nice post. In concept I would like to invest writing such as this moreover โ€“ taking time and actual effort to make a good articleโ€ฆ but exactly what do I sayโ€ฆ I procrastinate alot and no indicates manage to get something done.

Reply
Bartholomew says February 15, 2019

How good are you as a teacher? My wife will kill me if I waste anymore capital in options if I don’t get results after some more training.

Reply
    David Jaffee says February 15, 2019

    I work hard to exceed the expectations of all my students.

    Below is some recent feedback from students:

    https://youtu.be/T_SgJKRC5uw

    Reply
foloren torium says February 11, 2019

Utterly written content material, thanks for selective information. “Life is God’s novel. Let him write it.” by Isaac Bashevis Singer.

Reply
    David Jaffee says February 11, 2019

    Thanks for the comment

    Reply
jerry mendelson says January 5, 2019

Getting $2.00 for $160.00 margin is about 1.25% in 6 weeks. How do you get 50% per year?

Reply
    David Jaffee says January 6, 2019

    Hi Jerry. How are you calculating margin? Also, how are you extrapolating out one specific trade to an entire year?

    Reply
Ryan Alamgir says December 27, 2018

Hi would you please contact me at 571-991-5138? Thanks Ryan

Reply
    David Jaffee says December 28, 2018

    You can email me

    Reply
Stephan Van Atta says December 26, 2018

I’m hoping to learn your strategies for the purpose of income replacement. Is it appropriate to think in terms of daily income? For example ‘I want to make between $200-$300 per day to replace my current income.’
Thank you
Stephan Van Atta

Reply
    David Jaffee says December 28, 2018

    I answered this via email

    Reply
paul korn says December 19, 2018

what is your account worth today?

Reply
    David Jaffee says December 20, 2018

    Less than it was 3 months ago. I’ve mitigated losses by selling calls, but when the VIX increases from 10 to 26, it’s hard to not lose unless you continuously hold short delta.

    Reply
      paul korn says December 28, 2018

      David, Please answer my question. Thanks

      Reply
Add Your Reply
>