A brand new trader comes online and buys an option. For what reason did they choose “put” over “call.” Maybe the option was trending high and they felt it was due to fall in value.

The “gut shot” options trading strategy might not be ranked high in a list of best option strategies, but it is a strategy none-the-less. For those traders that prefer a little more analytical science to their options buying strategy, we put together the top seven best option trading strategies for you. Read on for consistent wins.

Best Option Strategies

Trading options without a strategy is the same as flipping a coin. There is a good reason why you never hear going to a casino as investment advice – gambling isn’t an investment. A strategy is key.

There are so many strategies for buying and selling options out there. It will save you hours and dollars if you narrow your strategy studies down to the proven and working strategies in today’s options market. Choose one of these seven popular trading strategies to get started ahead of the curve:

1. Long Calls and Long Puts

Not to be confused with “long shots,” Long calls are buying an option for a longer period of time. This strategy is particularly effective when the option is at an unusually low value. Buying a long call position on this option gives ample time for the option to recover in the market and mature at a profit.

Long puts are the same strategy but for selling the option. If a trader is fairly certain that an option will lose value sometime in the short term, buying a long term sell option helps to give the option time to run out its uptick trend and mature under the strike rate.

2. Butterfly Spreads

Butterfly spreads are great for steady consistent options that are not moving much over time. The trader will use both bull spread and bear spread strategies at three different strike prices.  If the butterfly spread is positioned evenly and the option doesn’t uptick or downtick sharply before maturing the trader will enjoy net profits.

3. Strangles

When a market is expected to be volatile, a strangle or straddle strategy gives you a payout either way if the market does make a move unexpectedly. A strangle is where you buy many puts and calls at different strike prices. A strangle opens the profit window a little but also reduces the payout on the options close within that same window.

4. Straddles

Straddles work much the same way with a put call option combination, but the options are all bought at the same strike price. Both Strangles and Straddles are a way of creating a window of profit that the option can mature at and still be profitable.

5. Iron Condor

Like butterfly spreads, the iron condor strategy is used with options that have low volatility. Buying a stand-alone call or put on an option that isn’t seeing much movement is risky.

In this strategy, an investor buys both a bull put spread and a bear call spread, counting on the options keeping within a marginal fluctuation. Investors use an iron condor because of its likely earnings, although modest, from the option premiums of a consistent valued option.

6. Covered Call or Buy-Write Strategy

This strategy is by far the most well-known and many options traders swear by it. This strategy involves hedging your investment with options to sell at or below the strike cost. Buying an option combination of both ‘call’ and ‘put’ positions act like insurance to minimize losses when the market acts unexpectedly.

There is no “sure thing” in investing but a covered call or option spread as its sometimes called gives you a chance to lose less if the option doesn’t go your way and at the same time keep good profits if it does go your way.

7. Married or Protected Put Spread

Much the same as a covered call, a married put is an insurance policy in case the option gains value. A married Put minimizes the risk of holding a position by placing a max loss on the trade.

A protective put is not so much about profiting from a decline in value, but more about protecting options you hold at a higher strike rate call. As the trader’s position trends towards a worthless option at the close, a protected put option effectively minimizes losses.

Bots and Courses

Trading bots use algorithms to determine the best time to trade with the least amount of risks. There are some of these programs on the market that have made traders consistent profits over the years, but there are just as many if not more stories of blown accounts when left to the wits of a software program.

Options trading bots don’t make the top 7 strategies list for good reason. They are unreliable and inconsistent from one to another. Don’t fall for the hype – smart traders stay away from bots.

Get informed and educated in the signs and strategies instead. There are many available options trading education companies and courses online that can teach you to develop your own personal trading strategy that works. The best options strategy might just be – your strategy.

To Call or Put Is the Question

Ultimately, all that matters is if the dot falls above or below the line at the time your option closes. The best option strategies give you an edge to be right more than wrong with your market reads which in this game is what it takes to win.