Too often, traders try to trade options without understanding the various strategies available to them. Option trading is not a game of luck or chance.
Successfully trading options requires knowledge, practice, and patience.
David Jaffee of BestStockStrategy.com is frequently asked which option strategy is most profitable.
Traders do not want to waste time or money on unsuccessful efforts.
In his online options trading course, David Jaffee teaches his members how trade options so that they can be consistently profitable when trading.
While there are plenty of options trading strategies out there, keep reading to learn why selling puts is the most profitable options strategy.
The most profitable options strategy is to sell out-of-the-money put and call options on market-leading stocks and indices or ETFs. Traders can take assignment of these options, and then participate in the upside, selling calls as well until the underlying is called away - then repeating the process. This trading strategy enables you to collect large amounts of option premium while also reducing your risk. Traders that implement this strategy can make ~30% annual returns.
List of Options Strategies
There are many strategies available for trading options, but only a few of them will work for you.
If you want to make money trading options and earn a profit, you should focus on selling option premium.
David Jaffee teaches his members how to win almost every trade by selling options instead of buying calls and puts.
While we do buy options during certain periods to hedge our portfolio, we believe that the best option strategy includes combining short options, long options with long stock.
By selling option premium, you have a more consistent strategy for making money because your probability of profit is extremely high.
David Jaffee encourages his members to sell stock options and focus specifically on selling vertical credit spreads and naked puts.
You could sell straddles and strangles, but, in general, selling straddles and strangles are not the best option trading strategies (except when used for 0 DTE and 1 DTE).
Remember that, in a bull market, the call side will likely be tested quite often when selling strangles, and these trades will need to be managed or closed for a loss.
You could also buy stock options - and I usually buy options to protect against tail risk and when I believe that we're at a price extreme in the market.
However, profits are not consistent or predictable when buying stock options, as a result, it's likely not the best options trading strategy.
You could buy stocks and then sell covered calls, but you're then gambling on the movement of the underlying stock and hoping for the best (plus the call will limit your upside potential).
Usually I will only accept assignment on a put (instead of actively rolling the position) if the underlying is an ETF or index.
Many people thought that owning PayPal at $220 was a bargain after it was trading around $307, yet it fell ~80%.
As a result, it's much safer, if you want to participate in the upside potential, to take assignment of an ETF or index.
Which is the most successful options strategy?
If you should avoid buying stocks and selling straddles and strangles, what is the most successful options strategy?
To repeat what was said earlier:
The most profitable options strategy is to sell out-of-the-money put and call options on market-leading stocks and indices or ETFs. Traders can take assignment of these options, and then participate in the upside, selling calls as well until the underlying is called away - then repeating the process. This trading strategy enables you to collect large amounts of option premium while also reducing your risk. Traders that implement this strategy can make ~30% annual returns.
David Jaffee has experienced considerable success selling option premium, and he has taught more than 1,500 members to do the same.
Many options trading courses and coaches encourage traders to be very active and trade often, but David Jaffee has found this strategy to be unsuccessful.
In his course, David Jaffee teaches members how to be patient when trading options. By making only two to three trades per week, you can still earn impressive profits and avoid a lot of losing trades.
Selling option premium reduces your risk and carries a higher probability of profit. In fact, selling option premium is significantly less risky than buying and selling stocks or buying out of the money call options options.
Over time, small and consistent profits add up considerably. You will not get rich overnight by selling option premium, but you can compound your profits and earn considerable gains.
Is there a guaranteed profit options strategy?
There are very few guarantees in life.
David Jaffee has found that selling option premium provides the best chance for success.
When searching for which option strategy is the most profitable, too many traders get sucked into get-rich-quick schemes. By falling under the spell of fake gurus and scams, you will only end up losing money.
The truth is, day traders do not earn a profit and popular options trading gurus are lying to their followers.
David Jaffee shares the trades that he sends to his trade alerts subscribers on YouTube. David Jaffee believes that it's possible to win up to 98% of your trades by selling option premium.
There is no way to make a million dollars overnight, unless you win the lottery.
The best way to make a profit trading options is by selling option premium.
It may not be the most complex option strategy or fast-paced, but it is consistent and reliable.
You do NOT want the most complex option strategy, instead you should strive for a simple strategy that has a high probability of profit which you can easily implement.
If you want to make a living trading options, selling option premium is the best stock market trading strategy.
Can you use an options calculator?
Some traders, especially those who are new to the game or inexperienced, see profit calculators as a shortcut.
Unfortunately, you cannot cheat your way to success.
Using an options calculator may provide some quick results, but they are not sustainable. You need knowledge and experience to really be successful trading options.
If you rely on an options calculator without investing your time in learning the ropes, you are throwing your money away.
Can I use artificial intelligent ("AI") and Option Trading Bots or Automatic Trading Bots to Trade Options?
You can use artificial intelligence (AI) to trade but it's not recommended. People want to use bots to remove responsibility and decision-making from trading. Trading strictly by rules and utilizing mechanical trading, without any discretion, will likely not beat the market.
Learn the Best Option Strategy Ever
You can waste a lot of time searching for the most profitable options strategy reddit feed or watching YouTube videos that promise instant success.
Or, you can invest your time wisely and learn from a successful options trader because many people consider David Jaffee to be the best options trading coach.
While there is no options strategies cheat sheet, you can learn the best options trading strategy to maximize your returns while reducing risk.
David Jaffee offers a comprehensive online options trading course providing a complete breakdown of the most profitable options trading strategy.
If you want to learn how to sell option premium and earn a profit, sign up for David Jaffee’s course through BestStockStrategy.com and subscribe to his real-time trade alerts so that you can learn the best option strategy and the most successful option strategy.Frequently Asked Questions (FAQs)
What is the best stock strategy?
The best stock strategy is to sell put options on stocks that you want to own. Then take ownership of those stocks if the options expire in-the-money. By doing this, you'll be able to purchase stocks at a discount while also participating in the upside potential of the stock.
Which Option Strategy is Most Profitable?
At fixed 12-month or longer expirations, buying call options is the most profitable, which makes sense since long-term call options benefit from unlimited upside and slow time decay.
However, there is also significant portfolio volatility associated with this strategy. As a result, the option strategy that is most profitable is to sell puts and then take ownership of the stock if the options expire in-the-money.
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.
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.
Additionally, by buying options during periods of high complacency, you can decrease portfolio volatility while also making money during a stock market crash.
You can also read a great blog post here on the most successful options strategy.
How many options strategies are there?
There are a lot of options strategies, but it's best to focus on the few that yield the best returns: Selling puts and buying protective puts during periods of low volatility, while buying calls during bear markets.
Is buying options profitable?
Yes, it can be, but it's important to buy options with longer durations and during periods of extremes. Buying put options during periods of complacency and low volatility will protect your portfolio.
Whereas buying calls during bear markets, after a large sell-off, can provide very large returns.
What is the safest option strategy?
The safest option strategy is to sell OTM put options on large-capitalization stocks with strong brands.
Then you can take ownership of the shares if the strike price expires in-the-money.
By doing this, you can participate in the upside of the stock.
Also, buying protective put options during periods of complacency, and buying call options during bear markets, is also a safe way to profit when trading options.
Are there unique option strategies?
Yes, there are countless option trading strategies, however it's best to focus on the most profitable option trading strategies (selling puts and buying calls) while also protecting your trading account from large volatility swings by buying protective puts during periods of complacency.
Is option trading profitable?
Yes, option trading is profitable, when done correctly. It's important, when options trading, to sell out of the money put options on stocks with strong brands that you'd like to own.
You can buy options when the market is overextended to the upside (when VIX is low), and you can take assignment of stocks when VIX is high.
So yes, options trading can definitely be highly profitable.
This is the most successful options strategy:
Selling options is the most successful options strategy, and there are backtests performed by the CBOE to prove this point. The first strategy on the list is selling puts and the cash-secured put.
You can also take ownership of these puts, preferably when selling options on ETFs or indices, and then participate in the upside.
Which option strategy makes the most money?
The most profitable options strategy is to sell out-of-the-money put and call options on market-leading stocks and indices or ETFs. Traders can take assignment of these options, and then participate in the upside, selling calls as well until the underlying is called away - then repeating the process. This trading strategy enables you to collect large amounts of option premium while also reducing your risk. Traders that implement this strategy can make ~30% annual returns.