I recall reading in the past where only seventeen surgical operations covered the vast majority of surgeries performed on people.

And I think you could say something like that with options trades.  While there is virtually an infinite number of ways to put options trades on, there is some much smaller number of plays that cover the majority of options trades that people put on.

I don’t know what that number is, but I would bet it is seventeen or less.  And in this post I’ll tell you what four of my favorite option plays are.  Sure, I have others, but what is good about them is they are pretty easy to understand and execute.  And even better, you can do all of them inside an IRA account.

The first of these is where we put on a pure option play.  We are picking the direction we think a stock will move and buying a call or a put.  We are betting the stock will go in our direction.  This will make the option value rise.  And we will sell the option to someone else at the higher price.

We make a profit, and never even owned the stock.

This has got to be the most common option play there is.

The second of these is what I call buying stock for half price.  It is similar to the first, but our intention is a little different.

We identify a stock we would like to invest in.  But instead of actually buying the stock, we use deep in the money options to buy it at half price  We don’t actually buy it, but the way we buy the option gives us price movement similar to if we actually had bought it.

And did I mention we get all of this for half price?  I’m all for getting things of value at half price, aren’t you?

In our third type of trade, we play where the odds are 80% in our favor of making a profit.  We sell options.  Now the profit is typically not as great, but this method puts money in our account immediately, and our odds of keeping it are quite good.  I believe most successful options traders play the sell side quite frequently for this reason.

And I really like the forth play, which is called a straddle.  Here we are buying options again, but we are not picking a direction.  We buy a call and a put on the same stock.  While it sounds crazy at first, we will make money if the stock moves fast and far enough.  And if it doesn’t, theoretically, we may not lose any money, or a negligible amount.  That has a nice ring to it, doesn’t it?  We will win or breakeven (more or less).

So those are my four of my favorite option plays.

Look for future posts where I tell you all about them.  And a few more favorites to boot.

To your health and prosperity – John