Options Made Easy: Your Guide to Profitable Trading, Second Edition

Step 1—Choose Your Favored Strategies (Keep It Simple!)

I’ll consider using the following strategies at various times:

Strategy	Minimum probability required
Buying or shorting the underlying asset	High
Straddles or Strangles (Volatility plays)	High
Collars	High
Covered Calls	High to very high
Deep in the Money calls or puts	Very high
Bull Call and Bull Put spreads	Very high
Bull Put spreads	Very high
Bear Put and Bear Call spreads	Very high

The probability table is just to give you an idea that if I don’t think there’s more than a reasonable chance of success, I won’t place the trade in the first place. For options trades, I require high probability, and the higher the leverage of a trade (for example, Deep in the Money Calls or Puts), the more certainty I require. ...