FNO Trader - A Free Tool to Track Options Greeks, Chain, Open Interest, Straddle & Orderflow
Updated: Dec 13, 2022
Options trading strategies are numerous and can be quite complex. In general, an options trading strategy involves the simultaneous purchase and sale of options contracts with different strike prices and/or expiration dates.
The purpose of an options trading strategy is to generate profits by correctly predicting the future direction of the underlying asset's price.
There are two main types of options trading strategies: directional and non-directional.
Directional options trading strategies bet on the future direction of the underlying asset's price. In contrast, non-directional strategies do not make any assumptions about the future direction of the price.
The most popular directional options trading strategy is buying call options or put options. Recently many options traders also started selling options even as a directional strategy.
The most popular non-directional options trading strategy is buying a straddle.
A straddle involves buying both a call option and a put option with the same strike price and expiration date.
The advantage of a straddle is that it doesn't matter which direction the underlying asset's price moves; as long as there is enough movement in either direction, the straddle will generate a profit.
There are endless variations of options trading strategies, and new ones are constantly created. The important thing is to find a strategy that fits your personality and risk tolerance.