SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Options Trading Matrix


One of the greatest benefits to trading options is that you can make money in an up, down, or sideways market. For example: In a bull market you can buy calls, or purchase bull call spreads and bull risk reversals. In a bear market you can profit buying puts, bear put spreads and selling bear call spreads.

And in sideways markets you can make money selling straddles, strangles and iron condors.


And there are many more strategies to make money in any market. Below is my Options Trading Matrix which breaks these strategies into Bullish, Bearish, Long Volatility and Short Volatility categories.

options trading matrix

For beginner options traders I recommend sticking to three core strategies that can make money in any market condition. These are buying calls in a bull market, buying puts in a bear market and selling volatility via a buy-write/covered call.


Here is the breakdown on buying Calls:


A call purchase is used when a rise in the price of the underlying asset is expected. This strategy is the purchase of a call at a specific strike price with unlimited potential for profits. The maximum loss on this trade is the amount of premium paid. 


For example, the purchase of the XYZ 100 strike call for $1 would only risk the $1 paid. If the stock were to close at $100 or below at expiration, that call purchase would be worthless. If the stock were to go above $101, the holder of this call would make $100 per contract purchased per point above $101.
 

image.png

 

For the immediate level options trader buying calls, buying puts and buy-write/covered calls should also be used, along with bull call spreads, bull put spreads, bear call spreads, bear put spreads, put-writes and iron condors.


Here is my breakdown of an Iron Condor:


The Iron Condor position is the combination of a bear call spread and a bull put spread in the same underlying. 


It’s a strategy that’s a high probability trade, allowing for a modest profit with enough room for error. Also, it’s meant to be a directionally neutral trade, used when volatility is elevated in relation to its forecasted range. 


It’s my favorite volatility selling strategy. By selling a call spread and a put spread, you gain extra short volatility and decay, while at the same time limiting your risk.


Here’s the hypothetical call spread:


Stock XYZ is trading at 90. You’d theoretically sell the 100/105 bear call spread for $1. To execute this trade, you would:

 

  • Sell the 100 calls 
  • Buy the 105 calls

For a total credit of $1.
 

Here is the graph of this trade at expiration.

bear call spread

 

Here’s the hypothetical put spread:


Stock XYZ is trading at 90. You’d sell the 85/80 put spread for $1. To execute this trade you would:

  • Sell the 85 Puts
  • Buy the 80 Puts

For a total credit of $1. 
 

Here is the graph of this trade at expiration:

put spread
 

Now we will combine these two spreads to make an Iron Condor:


To do this, you simultaneously:

  • Sell the 100 calls 
  • Buy the 105 calls

For a total credit of $1.
 

And

  • Sell the 85 Puts
  • Buy the 80 Puts

For a total credit of $1.
 

This would give you a total credit of $2. 


Here is the graph of this trade at expiration:

Iron Condor
 

As you can see in the chart, at expiration, you’d make $2 as long as the stock stays between 85 and 100. Meanwhile, your downside is limited to $3 if the stock goes lower than 80 or higher than 105. 


And for the professional trader, every strategy listed in the options strategy matrix above can be used to profit in any market conditions.


To learn more about these strategies and Cabot Options Trader where I use these strategies to create profits in any market visit Jacob Mintz or optionsace.com where I teach and mentor options traders.


Your guide to successful options trading,


Jacob Mintz

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • Why New Traders Fail

    Our first advice to new traders is: "Learn First, Trade Later". The markets will always be there, but if you start trading without proper fundamentals, your capital will be gone very fast. The barrier to enter trading is so low today, commissions are near zero, and the whole trading game looks very promising.

    By Kim,

    • 0 comments
    • 242 views
  • Lumpy Dividends and Options

    Dividend payments, like oatmeal, may be smooth or lumpy. Smooth dividends are predictable, usually once per quarter. It is easy for options traders to believe these dividends are guaranteed, because they usually continue uninterrupted quarter after quarter. This also makes it easy to predict total return over a longer time span.

    By Michael C. Thomsett,

    • 0 comments
    • 268 views
  • Coming to Peace With Market Volatility: Part II

    On April 18th I wrote part I of this article, Coming to Peace With Market Volatility. I showed how the US equity market risk premium, defined as the annual average return of the Total Market minus the return of one-month US Treasury Bills, was a large 8.37% per year from 1950-2019. That’s the good news.

    By Jesse,

    • 0 comments
    • 250 views
  • Ratio Calendar Spreads

    The ratio calendar spread is well-known to some, but for others the risk/reward aspects are not well understood. One way to cover a short position is to own 100 shares of the underlying stock. Another, more creative way is to sell a shorter-term expiration position and buy a longer-term position.

    By Michael C. Thomsett,

    • 0 comments
    • 612 views
  • Studies Vs. Real Trading

    "Who you gonna believe, me or your lying eyes?" Our members and readers know that buying pre earnings straddles has been one of our favorite strategies that produced consistent gains in the last 8 years with very low risk. Yet there is a significant number of studies showing that this strategy has a negative expectation. 

    By Kim,

    • 0 comments
    • 646 views
  • Should You Hedge or Diversify?

    Using the most popular S&P 500 ETF (SPY) to represent the US stock market, this article will look at different ways to manage equity market risk using historical ETF and options data from ORATS Wheel since 2007. We will analyze the following unhedged, hedged and allocation choices:

    By Jesse,

    • 11 comments
    • 945 views
  • Coming to Peace With Market Volatility

    From 1950-2019, the average annual US equity market premium (return of the total stock market minus the return of one-month US Treasury Bills) was 8.37% per year. This was a large average annual risk premium for owning stocks.  The premium was volatile, with a Standard Deviation of approximately 15% per year.

    By Jesse,

    • 0 comments
    • 448 views
  • 1,300% Gain in One Day? Not so Fast

    Would you like to book a $1,300% gain on a one day low risk trade? I would. That would imply that you turned your $100,000 account into $1,400,000 in just one day. Do it couple times - and you are a billionaire. Sounds too good to be true? It is possible in a Twitterworld. In a real world.. not so much.

    By Kim,

    • 0 comments
    • 485 views
  • A More Diversified Anchor Strategy

    Over the past few months, the performance of the Leveraged Anchor strategy has exceeded our expectations.  There has also been a few things learned regarding adjustments after large market falls, that had never been contemplated (see Anchor Analysis And Options). 

    By cwelsh,

    • 0 comments
    • 471 views
  • Relative Yield of an Option

    What is the “relative yield” of an option? There is a tendency to think of yield in terms of dollar value in premium alone, but to not factor in other elements. This makes side-by-side comparisons invalid unless adjustments are made. Dollar value by itself ignores the true yield, not to mention moneyness and time aspects.

    By Michael C. Thomsett,

    • 0 comments
    • 452 views

  Report Article

We want to hear from you!


There are no comments to display.



Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

Options Trading Blogs Expertido