A new trader could start by trading exactly like a tastytrader but that is probably asking a lot. It might be hard to grasp all the concepts and believe in them to take that first step. That’s why we decided to put together this strategy overview which can take you from beginning strategies to more advanced ones, each accompanied by a table which lists the directional bias,, the level at which to (if there was one) and such as to be taken for those trades with an .
Awas the first strategy examined. Most traders will have an upward directional bias on a particular stock or the market as a whole. Instead of buying the stock or the stock index a short Put might be better. It and increases your POP. The flipside of the short Put is the short Call. This is appropriate when a trader has a bearish bias. The guys reviewed the benefits of a short call. So what do you do when you have no directional bias? A was the next strategy discussed. This combines the short Put and short Call strategies. To do the same thing but take on more risk (and hopefully more reward) one can trade an at-the-money (ATM) .
The rest of the the strategies were ones with defined risk. A, using either Puts or Calls, was examined and then a Vertical debit Spread. Finally, an was discussed. Just as the short Strangle is a combination of a short Put and a short Call an Iron Condor is a combination of a short Call Spread and a short Put Spread.
For more information on Strategy Selection see:
Best Practices from August 5, 2013:
tasty BITES from December 9, 2015:
Options Jive from February 24, 2016:
Watch this segment of Best Practices withand for a great overview of the main strategies we use when we trade options.