Top 12 Options Trading Strategies Every Trader Should Learn

Options trading is flourishing in the dynamic market of financial markets for options traders to profit from market volatility, diversify their portfolios, or earn income. Options trading offers a world of opportunity but also a world of risks—particularly if you lack the proper cover. So if you have any questions in your mind “What is the best strategy for trading options?”, “Which option strategy is best under which market condition?” Then this blog is surely what you need.

Let's discuss 12 must-know options trading strategies for every trader—beginner or experienced—so that you can navigate the markets successfully.

1. Covered Call

One of the most favorite options trading strategies for long-term investors is a covered call. This includes a case of selling a call option on an asset while holding the stock on that same asset.

When To Use: You are neutral to bullishly biased on the stock.

Benefit: Income; could help generate additional income with the premium, provided there are no children in the household.

2. Protective Put

Buying insurance for your stocks is what this strategy is like. The first is a protective put, which is to buy a stock and a put option on the stock.

When to Use: Bullish on the stock and need protection from downside.

Benefit:  Limits downside as you capture any upside gains.

3. Long Call

The long call is a straightforward strategy. If you think the price of the stock will go up, you buy a call option.

Best time to use: If you’re anticipating a large bullish move.

Benefit: Profit is unlimited, and risk (premium paid) is limited.

4. Long Put

To buy a stock to fall, you use a long put. To profit from the decline, you buy a put option.

Best Used When: Bearish outlook on a stock or index.

Benefit: Low-risk profits with falling prices.

5. Bull Call Spread

A Bull Call Spread serves as a market strategy that combines the purchase of cheap call options with simultaneous selling of more costly call options both expiring at the same time.

You should use this strategy when you predict the asset value to rise moderately.

Bull Call Spread lets investors start with less premium cost and establishes specific profit and loss parameters.

6. Bear Put Spread

A put selling strategy goes into effect when investors purchase a more expensive put option yet simultaneously sell a cheaper put option which expires together.

Neutral Market Conditions will occur when you predict the asset value to decrease moderately.

The strategy provides affordable prices compared to typical long put options alongside specific profit and risk control parameters.

7. Straddle

Straddle includes a call and a put at the same strike price and expiry but not at the same date. It's ideal for volatility trades.

This pattern is best used when you think that the price will move in a big direction.

Benefit: It means the profit is unhedged in the event of a large move in either direction.

8. Strangle

The difference between a strangle and a straddle is that the options are not the same strike.

When to Use: You want to buy volatility but cheaper than a straddle.

Benefit: It has a lower cost than straddle and a wider profit zone.

 9. Iron Condor

It is one of the iron condor, which is a bear call spread and a bull put spread combination. Provided the stock is in a range, each subsequent move of the stock index equates to increased profit.

Since the market will be neutral, apply it best when.

Benefit: Limited risk and reward (high probability of profit)

10. Butterfly Spread

It entails multiple call or put options at equidistance from one another, and it puffs with a strategy to make sure that one of these options is in the money.

Best used when expecting low volatility near a particular price.

Benefit: Cheap to get in; high payback if struck at the mid-price.

11. Calendar Spread

It is entering the long-term option market and short-term option market (at the same strike).

When to Use It: You anticipate there will be little movement in the mid-term.

Benefit: From time decay, differences in volatility, and different trading strategies between the investor and lender.

12. Collar Strategy

A collar is creating a collar which is buying a stock, buying a protective put and selling a covered call option.

When to Use: You want the best protection of profits with the least amount of downside risk.

Benefit: Risk management with potential upside limitation

What is the best way to Trade Options?

Another popular question is: “What is the best option trading strategy?” Another element is to follow your strategy with prevailing industry conditions. Still, most seasoned traders would suggest testing out the room with simple methods like long calls and puts, covered calls, or protective puts before transitioning to more advanced options such as iron condors or calendar spreads.

Also, risk management is crucial. It is said, even the best strategy goes wrong without having proper stop-loss or hedging.

Tips to Maximize Your Options Trading Success

 Learn the Greeks – Delta, gamma, theta, vega… Practice understanding better trade management.

Combine Technical & Fundamental Analysis for an Increase in trade accuracy.

Try Paper Trade First – Try trial strategies without real cash using simulators.

Global clues and company news, along with economic data, drive options prices.

Keep a trading journal to review and reflect, and then analyze what works for you.

Conclusion

Trading in options can’t be entirely wagered—education, discipline, studying market cycles and finding ways to capitalize on them to your advantage can pave the path to playing the options game. When you master the top 12 options trading strategies, the market condition you can trade much better than the beginning options trader. This guide provides a solid foundation on whether to use a specific option strategy for a volatile market or which is the best option strategy for trading options, without necessarily pointing you directly to it.

If you are inspired to take your trading journey seriously, there is further you may look into how the best option traders in India have built their expertise, not overnight but through education and practice.

Like always, small, risk controlled, and never stop learning.