Best Option Strategy
What is the ‘best option strategy’?
Of course this could be viewed as a silly question as the ‘best option strategy’ is purely a matter of opinion as one trader will no doubt have a favorite option trading strategy over another.
However, one not so silly answer to that question could have to do with current market conditions as well as where the option trader believes the asset being traded will be moving over the next couple days to couple weeks of time.
For example, if a trader believed that Stock ABC was going to be range bound over the next four weeks of time and the volatility levels on ABC were a bit higher than average, the best option strategy might be an iron condor spread – or a butterfly spread.
Or, if the same trader believed that ABC would be turning bearish and moving slightly down and the vols were lower than average – the best option strategy might be a calendar spread to take advantage of the rising vols if in fact the underlying did move down.
If the same trader was convinced beyond a shadow of a doubt the the stock being used was about to blast off into the stratosphere – the option option strategy might be to sell a put credit spread – or a bull put spread.
Finally – if the trader was sure that the market was going to crash like it had never crashed before and the world would come to a fiery end before morning – the best option strategy would probably be for him to try and withdraw all his money from his option brokerage account and then head on down to the local Home Town Buffet and pig out one last time.
photo credit: Port of San Diego
