Best Options Selling Strategies for Maximising Your Investment

Most traders are not looking on the selling side of options, while not that many understand the inherent reliability of options selling strategies to generate consistent income. If done correctly, options selling is a powerful tool to increase return for a given amount of risk.

In this blog, I will share with you the best options selling strategies, see those with real world examples, explain the Option strategies using examples and find a few of the Option strategies that I think are close to zero risk. This knowledge will help you no matter you are a beginner or an experienced trader and will tell you which option is best for selling and how you use it.

What is Options Selling?

Options selling (or options writing) involves selling call or put options to generate premium income. Whereas option buyers pay a premium to have the right to exercise the contract, sellers receive the premium at the outset and incur the obligation to complete the contract should it be exercised.

The key advantage? An assumption of Theta is that it works in favour of the seller. Since the expiry approaches, the option value decreases for the seller to retain most or all of the premium.

Why Consider Option Selling?

• Regular Income: Traders will generate regular income if they choose to sell options with well-placed strike prices.

• Statistics suggest that more than 60-70% of options expire worthless, thus giving sellers a statistical edge.

• Option Selling: Used along with the right strategies, option selling can be used to control downside risk.

• Trades can be designed on a variety of market view, from bullish to bearish to neutral.

1. Covered Call Strategy – A Conservative Winner

How it Works:

You already own stock, you sell a call option on a stock. You keep the premium if the stock is not above the strike price on the expiration date. If it moves above, you’re liable to sell your option there at the strike price, you’re still making a profit.

Example:

• You have purchased 100 shares of Reliance at ₹2,300. For ₹30, you sell a call option for a ₹2,400 strike price.

• You get the ₹30 premium if Reliance goes below ₹2,400.

• If the price rises to ₹2,450, you sell your shares for ₹2,400; you have a capital gain of ₹100 plus the premium of ₹30, and your total gain is ₹130.

This is yet one of the best-selling strategies to derive steady income and less risk using keyword integration.

2. Cash-Secured Put – Get Paid to Wait

How it Works:

You are willing to buy the stock at some strike price and you sell your put option. If it’s below the strike price, your obligation is to buy the stock. If not, or if so you keep the premium.

Example:

• You want to buy Infosys at ₹1,300 but now you are paying ₹1,350. You sell a ₹1,300 put for ₹25.

• If Infosys is above ₹1,300, you earn ₹25 per share.

• If it falls below that, you buy the stock at ₹1,300, and you are ready to do that anyway.

This is an example of an option strategy with keyword integration — it shows what you can do to collect income and yet buy good-quality stocks on sale.

3. Credit Spreads - Balanced Risk and Reward

How it Works:

You can execute a credit spread by trading two options of matching type between call or put while choosing different expiration values. The specific objective of this strategy is to receive a premium payment greater than the expenses.

Types:

• The trader sells a call at a lower strike and buys it at a higher strike through Bear Call Spreading.

• Risk management with the Bull Put Spread occurs through the combination of selling a higher-strike put with buying a lower-strike one.

Example – Bull Put Spread:

• Sell a ₹1,600 put for ₹30

• Buy a ₹1,580 put for ₹15

• Net credit: ₹15

The maximum loss from this trade equals ₹20 because it is calculated as strike difference minus premium collected.

4. Iron Condor strategy 

How it Works:

An Iron Condor setup contains a bear call spread together with a bull put spread. The investment strategy generates profits because the stock maintains positions between two designated values.

Example:

• Sell ₹1,600 put, buy ₹1,580 put

• Sell ₹1,700 call, buy ₹1,720 call

• Collect premium from both spreads

The most money comes from this trade when the stock price exists between ₹1,600 and ₹1,700.

5. Ratio Spread – Aggressive but Rewarding

How it Works:

The strategy entails selling multiple options while keeping most of your position short. Calls and puts serve as the typical instruments. This strategy provides significant rewards but its risk level remains uncertain as long as risks are managed properly.

Example – Call Ratio Spread:

• Buy 1 ATM call

• Sell 2 OTM calls

The premium payment leads to profit when stock prices rise moderately. High option price levels result in increased losses, although rapid price point changes can result in severe losses.

What Option Will Be Best for Selling?

• When neutral to somewhat bearish, you sell Call Options

• When neutral to slightly bullish, sell Put Options.

• Spreads: For limited risk and moderate returns.

• For consistent income, stock accumulation uses Covered Calls or Cash-Secured Puts.

The cash-secured put is normally the safest and most straightforward for beginners. For experienced traders, iron condor and other similar strategies like credit spreads can pack in higher returns with lower risk.

What is the best zero-risk option strategy?

The truth is, there is no such thing as a zero-risk option strategy in reality. The risk involved in every trade in the market can be either capital, will or market volatility. However, there are ways for risk to be brought down nearly to zero.

• If you already own the stock, Covered Calls

• Buy to Own (Cash Secured Puts if you want to own the stock anyway)

• Credit Spreads (with well-placed strikes)

More specifically, these strategies are not truly risk-less but are highly referred to as low risk or ‘near zero’ risk strategies when well structured.

Tips for Successful Option Selling

• Sell options when implied volatility (IV) is high to ensure the premiums will be more attractive.

• Weekly options decay faster but are less risky. Monthly options are more stable.

• Sell options beyond support or resistance using Technical Levels to increase the success rate.

• Be careful with earnings season; the markets can get truly unpredictable during earnings season.

• Always have a risk plan; use stop loss or hedging as needed.

Final Thoughts

Option selling is a good way to steadily generate income and make it confined. Traders can, however, improve their edge in the market by mastering some of the best options selling strategies. However, your success is represented in your ability to manage risk, regardless of whether you’re doing option strategies with examples like covered calls and cash-secured puts or more advanced tools such as iron condors and credit spreads.