lystn

Hey everyone, Kirk here again at Option Alpha. In today's daily call, I want to talk about the best option strategies for new traders. I think there's a couple of strategies that you can really focus on if you're brand new or if you're fairly new to getting started in options trading. I think the first general theme behind the best strategies I think is all risk-defined. As you’re starting out, you don’t want to do anything undefined risk. What that means is you don’t want to do anything naked option selling. Even naked option buying is really a bad idea. Even though it’s not like a naked position, but you’re just single leg buying options or selling options, probably not the best thing you should do. I definitely suggest you should go with more of the spread type strategy where you’re buying one and selling the other. The reason is because you can control your risk a little bit more. It is risk-defined, it is profit-defined, but you know exactly what you’re getting for those positions. When you actually place the trade, you should know exactly how much you can make, how much you can lose, there’s no gray area of profitability where you potentially have unlimited profit potential or limited profited profit potential, whatever the case is. As far as strategies go, I really think you could focus on more of the credit spreads, iron condors and iron butterflies. They’re really all in the same family. To me, it’s just like option selling on a risk-defined basis. But the credit spreads, the iron condors and the iron butterflies are really good because they’re all option selling strategies, we’re giving the market a range to move in and still be profitable and you can use them like among each other. Credit spreads, eventually build an iron condor and as you move an iron condor closer together, it becomes an iron butterfly. Again, it’s all one in the same and you can literally build an entire portfolio out of doing that by just using those simple strategies. Bull put spreads, bear call spread, those are those option selling strategies where you just take in a directional move on the market and then neutral iron condors, neutral iron butterflies. Ultimately, this is the best thing for new people to start with and sets the foundation for doing more advanced strategies later on. As always, hopefully you guys enjoyed this. Until next time, happy trading!