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Is There A Holy Grail Of Options Trading Strategies

This post was originally written on April 24, 2013 at

Is there a Holy Grail of Options trading

The-Global-Money-MachineEvery Options trading strategy is a compromise and has its pluses and minuses. To get something, you have to give up something else in return. So is there truly a Holy grail of Options trading strategies ? Let's first look at the repertoire of wonderful strategies available to all Options traders, and a review of these strategies' pluses and minuses before we answer that question.

Options Strategies

Single Options - Inexpensive, but if you're wrong about direction, you lose

Option spreads - Probably the most sound Options strategy, but limits profits

Credit spreads - Ideal income strategies, but the reward to risk is low. Faces large drawdowns if the position goes against you.

Iron condors - Great strategy, but same issues as in credit spreads

Calendars and Time spreads - Profit zone is not great. Also cumbersome to adjust if things go wrong

Straddles and strangles - Great volatility strategies, but the massive time decay and / or the Volatility crush can make a grown man cry

Weekly Options - You better skip your lunch break or you may not recognize your position when you get back.

The point is - there are great Options strategies, but they all have minuses.

But what if you could tackle the minuses of a strategy by using not just one of these strategies , but dig deeper into the Options trading playbook and come up with a sophisticated strategy combo to tackle the problem ? Now, this certainly raises the possibilities for the existence of the Holy grail. And this is exactly what this is all about.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.