Disliked{quote} All news related strategies for options I have come across so far suggested to buy a straddle at the money. I will play around with payout profiles a little bit but I am sure that due to me not understanding the basics well enough options will not be used in my daily trading anytime soon. There...Ignored
I trade for long-term positions and mostly write options but you need to understand the risk/reward. If you sell naked puts/calls then you have unlimited loss potential the same as buying/shorting the underlying. Selling spreads is safer but rewards are smaller so you need a high success rate to be profitable. Selling far OTM options will give a high win rate but the occasional loss will wipe out many wins. I prefer to sell puts in something I'm willing to buy @ a certain price. It's just a method of buying the underlying @ a lower price than directly buying the underlying.