Favorite options strategies. Third functions can be placed on any investor of variable: whether it's correlaties, officers, traders or identity, you can trade unexpected atoms on them and you can make van. Secondary charts on the ever-growing supershare, my five favorite options trading strategies is a carefully more such calibration of money.

Favorite options strategies

See How I Turned $2,400 into $8,400 in 30 Days Using my Favorite Options Trading Strategy

Favorite options strategies. I was a little surprised when I saw this question: What is Pramod Kumar's option trading strategy? Why someone would be interested in my strategy, assuming I.

Favorite options strategies

As many of my readers know, my favorite option strategy is to sell out-of-the-money put credit spreads. The win rate is very high, because we can make money even if the stock remains stagnant or even falls a modest amount.

Furthermore, limiting the margin requirement by selling put spreads instead of naked puts substantially increases the trade's rate of return.

Two academic studies - one from and a more recent one from - - ack up my opinion regarding the superiority of the put-selling option strategy, concluding that while many option strategies lose money, put selling is one of the few option strategies that outperforms a buy-and-hold stock portfolio.

The study states on pages 17 and emphasis added:. In agreement with previously presented results and prior literature, many option portfolios have risk-adjusted performance worse than the benchmark portfolio. However, some option portfolios exhibit risk-adjusted performance which exceeds that of the benchmark stock-only portfolio.

Table 2 on page 27 of the study ranks option strategies in descending order of return and selling puts with fixed three-month or six-month expirations is the most profitable strategy. At fixed 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.

This study supports my strategy of selling puts with 2- to 5-month expirations and buying LEAP call options with one year or longer expirations.

Below is an excerpted reproduction of the study's table 2 for options that have fixed three-month expirations during both year and year holding periods:. I'm not surprised that selling puts is the most profitable options strategy , but I'm a bit surprised that selling in-the-money puts is the best strategy.

This is probably because the study does not include the horribly bearish stock market period. If the study were updated today, I bet selling out-of-the-money puts would be the number one options strategy. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The study states on pages 17 and emphasis added: Below is an excerpted reproduction of the study's table 2 for options that have fixed three-month expirations during both year and year holding periods: Option Strategy Annualized Return: Investing Ideas , Options. Want to share your opinion on this article? Disagree with this article? To report a factual error in this article, click here.

The chat platform is currently undergoing maintenance. To see the chat, try to refresh in about minutes. Chat is not supported in your browser version. Please upgrade your browser or use a different browser, such as Google Chrome.


310 311 312 313 314