With over 40 different variations on techniques to trade options, it is pretty hard to decide which is the most profitable options strategy. Most traders, be they day traders or option traders, try to develop a trading plan that will at minimum beat the broader stock market, and there are hundreds of opinions about which is the best approach.

Option trading offers huge profit potential, and so is very attractive, but at the same time, many traders have lost very heavily when they launch into the world of options. There are plenty of forum posts that state how dangerous options trading can be, and how bad it is to trade derivatives.

Sometimes it seems that the only people making any kind of profit are those that sell options trading advisory services via a newsletter or website, and even their results are often disappointing. So, this then leads to two questions: Yes, it can be.

The leverage potential provided by options, which gives you the right to control large blocks of stock, is significantly greater than the potential of simple stock trading. If you are able to harness the power of this leverage, you can make huge amounts of profit from fairly small moves in the underlying stock price.

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With other strategies, you can make money if the stock goes down, and you can use yet another strategy to make money in a stagnant market. The problem with some but not all of the strategies is that you can lose a lot of money very quickly. Most options traders are introduced to the very simple to understand, and easy to implement, concept of buying calls for an ascending market or buying puts for a descending market.

As well as being simple to stock market 8/19/13 and apply, these two strategies have the potential to make fierce profit gains.

So, for sheer magnitude of profit, this can be the most profitable strategy. Very few traders are able to make these kinds of winners on a regular basis.

Most Profitable Options Strategy

The reason is that in order to be bull spread option trading strategies at this strategy, you need to have excellent technical analysis skills so that you can accurately predict a market move and the timing of the move.

It is possible, but it requires years of experience and a raft of technical analysis tools that you can understand and use effectively. Overall, the most profitable options strategy is that of selling puts.

It is a little limited, in that it works best in an upward market, although even selling ITM puts for very long term contracts 6 months out or more can make excellent returns because of the effect of time decay, whichever way the market turns. Selling credit spreads takes advantage of profitable trading strategy to binary options upward and downward trends in the market, and the margin requirements are smaller, making it easier for the smaller investor to start.

Even Iron Condors basically two opposite standing credit spreads make good returns in a stagnant market. When looking for the most profitable options strategy, do not look at the magnitude of profit.

Top Five Successful Strategies For Trading Binary Options | Finance Magnates

Rather, look at factors such as risk of loss, the technical analysis requirements, and the potential to develop a safe, reliable trading plan that generates regular monthly or even weekly income A Historical Perspective December 8, AN ANALYSIS OF INDEX OPTION WRITING FOR LIQUID ENHANCED RISK-ADJUSTED RETURNS. Return from "Most Profitable Options Strategy" to the Home Page.

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