Always Define Risk against Limited & Unlimited Reward
Other than the 35 Defined-Risk Spreads that do not require stock as part of the construction of the position (listed below), there are 6 Defined-Risk spreads that need stock to configure their positions. The 6 positions that have been deliberately excluded are: Long Call Synthetic Straddle, Long Put Synthetic Straddle, Synthetic Call, Synthetic Put, Collar and Covered Call. The use of stock in configuring these positions does not add material merit in controlling risk and there is no added monetary benefit in tying up available trading capital in a stock-dependent synthetic position that could otherwise be achieved without the use of stock. As an options trader in the first place, you want as little to do with the stock itself as possible, other than to configure the required option position around the underlying product, which can be substituted with a cash-settled Index instead of a stock-settled Index.
The techniques used in the Home Options Trading process will be confined to using 10 primary Defined-Risk Spreads that do not involve the use of stock in their construction: ATM-NTM Debit Calendar, OTM Credit Iron Condor, OTM Credit Vertical Call, OTM Credit Vertical Put, OTM Debit Iron Condor, NTM Strangle/ATM Straddle, OTM Debit Vertical Call, OTM Debit Vertical Put, Back Ratio Call and Back Ratio Put. The other spreads listed are a variant of the primary spreads. After all, there are only 2 true spreads: the Vertical and the Calendar, which is covered extensively in the trade plans of the video tutorials.
The path towards consistent results is to confine your trading to Defined-Risk spreads that are measured in terms of the amount of risk a spread is limited to. For your convenience of reference the Directional Outlook, Spread type (Credit/Debit), Expected IV Forecast (IV to rise/drop) and Profile of Greeks specific to the Spread Type has been summarized in the table below.
