Step Three of Three Options Strategy Example (INTC)

Well, you've now completed Step #1 and made a directional assumption. Check In this case, we have to be options sellers because IV rank is higher than 50, it's at
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You've now completed Step #2 and determined IV ranking. Check With only three options strategies to choose from, your decision just got a whole lot easier. The three most effective strategies to use when you are neutral on the direction of a particular stock and IV rank is high is to trade a Short Straddle, Short Strangle, or an Iron Butterfly. Each of these three strategies uses net options selling and takes full advantage of a drop in IV as well a sideways move in the stock price. The point here is that they all will accomplish roughly the same goal. So which options strategy should you ultimately use Back to our INTC example. When you read upon the details of Short Straddles and Iron Butterflies you'll learn they are more aggressive strategies with more defined risk. However, the Iron Butterfly is an option selling strategy whereby you have defined risk similar to an Iron Condor. At this point, you shouldn't be comfortable selling naked options, and if you are trading in a retirement account, you will be restricted from doing so. The most conservative strategy you have in your toolbox will be for this trade is an Iron Butterfly. And now you have completed the third step and have the perfect options strategy.
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Doesn't it feel great to have it all so clear I hope by now you understand the difference between trading stocks and options, and more than anything else, how much different they really are. And once you go through the stepson a few trades of your own, you will see how incredibly effective and profitable options can be.

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