Options Trader’s Cookbook:
10 Recipes for Market Mastery
1. The Classic Bull Call Vertical
Ingredients
Buy 1 lower strike call, sell 1 higher strike call (same expiration).
Preparation:
Choose strikes based on your bullish outlook; the lower strike is your entry, the higher caps your profit.
Serving Suggestion
Serve in a moderately bullish market with low volatility. Pairs well with a defined risk appetite.
Taste Profile: Limited risk, limited reward—sweet and simple.
2. THe Bear Put Vertical
Ingredients:
Buy 1 higher strike put, sell 1 lower strike put (same expiration).
Preparation
Set up when you expect a downturn; the higher strike put gives you downside juice, the lower reduces cost.
Serving Suggestion
Best in a bearish market with steady declines. Keep an eye on premium costs.
Taste Profile: Tart with a controlled finish.
3. The Long Straddle
Ingredients
Buy 1 ATM call, buy 1 ATM put (same strike, same expiration).
Preparation
Cook this up when you expect a big move but aren’t sure which way. Place at the money (ATM) for max flavor.
Serving Suggestion
Perfect for earnings season or volatile news events. Needs a spicy price swing to digest well.
Taste Profile: Bold and risky—high cost, high potential.
4. The Short Straddle
Ingredients
Sell 1 ATM call, sell 1 ATM put (same strike, same expiration).
Preparation
Whip this up when you predict a flat market. Collect premium as your base ingredient.
Serving Suggestion
Serve in low-volatility conditions—like a calm summer day. Watch for sudden market storms.
Taste Profile: Rich upfront, but bitter if the market moves too much.
5. The Long Strangle
Ingredients:
Buy 1 OTM call, buy 1 OTM put (different strikes, same expiration).
Preparation
Spread the strikes wider than a straddle for a cheaper entry; expect a big breakout.
Serving Suggestion
Ideal for volatile markets where you’re unsure of direction. Needs a hefty move to profit.
Taste Profile: Lighter on the wallet than a straddle, but still zesty.
6. The Short Strangle
Ingredients
Sell 1 OTM call, sell 1 OTM put (different strikes, same expiration).
Preparation
Sell out-of-the-money (OTM) options to pocket premium; pray the market stays in a range.
Serving Suggestion
Best in a sleepy, range-bound market. Avoid during volatility spikes.
Taste Profile: Smooth and lucrative if stable, spicy if it breaks out.
7. The Iron Condor
Ingredients:
Sell 1 OTM call, buy 1 higher OTM call; sell 1 OTM put, buy 1 lower OTM put (same expiration).
Preparation:
Build a range with wings; sell the inner strikes, buy the outer for protection.
Serving Suggestion:
Serve in a neutral market with low volatility. A trader’s comfort food.
Taste Profile: Balanced—limited risk, limited reward, with a creamy premium finish.
8. The Calendar Spread (Call)
Ingredients
Sell 1 near-term call, buy 1 longer-term call (same strike).
Preparation
Use time decay as your spice; the near-term expires faster, leaving the longer-term to simmer.
Serving Suggestion
Best when you expect slow upward movement and higher volatility later.
Taste Profile: Subtle and patient, with a lingering aftertaste.
9. The Broken Wing Butterfly
Ingredients
Buy 1 lower strike call, sell 2 higher strike calls, skip the upper wing (or adjust puts for bearish).
Preparation
Skew the butterfly by omitting one wing; tilt toward a directional bias.
Serving Suggestion
Best when you’re confident in a slight move but want zero-cost entry.
Taste Profile: Unbalanced but intriguing—free with a kick.
10. The Diagonal Spread (Bullish)
Ingredients
Buy 1 longer-term lower strike call, sell 1 near-term higher strike call.
Preparation
Blend calendar and vertical vibes; lean bullish with a time and strike twist.
Serving Suggestion
Ideal for a moderate bull run with volatility dips in the short term.
Taste Profile: Complex and layered—sweet with a hint of decay.
