Risk-Reward Ratio: ~1:2
Win Rate: 60-70%
Sell an option and buy a lower/higher strike option to limit risk. Best in trending markets.
Example: Sell a $50 put and buy a $45 put when expecting bullish movement.
Criteria to ConsiderRisk-Reward Ratio: ~1:2 to 1:3
Win Rate: 50-60%
Buy an option and sell another at a different strike to cap profits but reduce risk.
Example: Buy a $100 call and sell a $110 call for a bullish expectation.
Risk-Reward Ratio: ~1:2
Win Rate: 55-65%
Buy two options and sell three at different strikes to limit downside risk.
Example: Buy two $50 puts and sell three $45 puts.
Risk-Reward Ratio: ~1:2 to 1:3
Win Rate: 50-65%
Buy and sell multiple options at different strikes with an asymmetric risk profile.
Example: Buy a $50 put, sell two $45 puts, buy a $40 put.
Risk-Reward Ratio: ~1:2+
Win Rate: 60-70%
A modified iron condor with adjusted wings for a higher profit potential.
Example: Sell a $100 call, buy a $110 call, sell a $80 put, buy a $70 put.
Risk-Reward Ratio: 1:2+
Win Rate: 55-65%
Buy a long-term option and sell a short-term option at the same strike.
Example: Buy a June $50 call, sell a March $50 call.
Risk-Reward Ratio: 1:2+
Win Rate: 55-65%
Buy a long-dated in-the-money option and sell a short-dated out-of-the-money option.
Example: Buy a December $90 call, sell a April $100 call.
- Strategies like credit spreads, ratio spreads, and broken wing butterflies have a win rate above 50%.
- Each strategy offers a 1:2 or better risk-reward ratio while maintaining profitability.
- Best suited for traders who want a balanced mix of high win rate and good returns.