7 Options Strategies Every Serious Trader Should Know — And When to Use Them

Most people learn options backwards.

They learn the strategy first.

Covered call.

Iron condor.

Butterfly.

Calendar.

Straddle.

Then they go looking for somewhere to use it.

That’s like buying a hammer and walking around the house asking:

“What can I hit?”

😂

At Mattress Money, we start somewhere else.

We start with the market.

Then the stock.

Then the setup.

Then we choose the strategy that fits.

Because there is no such thing as the “best” options strategy.

There is only:

The right strategy for the right situation.

Options give traders more ways to structure a position than simply buying or selling stock. Some strategies are built for income, some for protection, some for volatility, and some for defining risk before the trade is ever entered. RFU Blog Post Copy Draft

That flexibility is exactly why I love options.

But flexibility without a system can turn into confusion real quick.

So let’s make this simple.

First: Know What Kind of Market You’re In

Before choosing a strategy, I want to know the environment.

At Mattress Money, we classify markets four ways:

Bull

Trending higher.

Bear

Trending lower.

Snake

Moving sideways or consolidating.

Gator

Sideways, choppy, and volatile.

Why does that matter?

Because a strategy that works beautifully in a Snake Market may get chewed up in a Gator Market.

And a strategy designed for a Bull Market can get smoked if the stock starts trending the wrong direction.

That’s why we don’t start with:

“What strategy do I feel like trading today?”

We start with:

“What is the market giving me?”

Then Use the 3D System

Before entering a trade, ask:

Direction

Where is the stock going?

Destination

Where could it realistically go?

DTE

How much time does the trade need?

That tells us a lot about which strategy belongs on the field.

Now let’s look at seven every serious options trader should know.

1. Covered Call

A covered call combines:

100 shares of stock + one short call option

You own the shares, then sell a call against them and collect premium. RFU Blog Post Copy Draft

This strategy is generally used when you’re:

Neutral to moderately bullish

and don’t expect the stock to explode far above your strike before expiration. RFU Blog Post Copy Draft

Example

You own 100 shares at:

$50

You sell a:

$55 call

If the stock stays below $55 through expiration, the option may expire worthless and you keep the premium.

If the stock rises above $55, your shares could be called away at the strike.

That means your upside is capped.

And that’s the trade-off.

Mattress Money Take

Covered calls can turn a stock you already own into a potential income-producing asset.

But don’t sell calls blindly.

If the stock is preparing for a major breakout, that premium might look real small compared with the upside you just gave away.

Best fit:

Snake / mild Bull

2. Protective Put

I call this one the stock-market prenup.

😂

A protective put combines:

Long stock + long put

The put gives you the right to sell the stock at the strike price, helping establish downside protection. RFU Blog Post Copy Draft

Let’s say you own a stock at:

$100

You buy a:

$90 put

If the stock gets hit hard, the put can increase in value and help offset some of the decline in your shares. RFU Blog Post Copy Draft

You’re paying premium for protection.

Just like insurance.

Mattress Money Take

People insure:

Cars.

Houses.

Phones.

Jewelry.

Then put $100,000 in the market and say:

“Hope everything works out.”

😂

A protective put isn’t free, and the premium reduces your overall return.

But sometimes protecting capital is more important than squeezing out every last dollar of upside.

Best fit:

Bull market with increasing downside risk / uncertainty

3. Long Straddle

A long straddle involves buying:

One call + one put

with the:

same strike and same expiration. RFU Blog Post Copy Draft

This is generally used when you expect a big move, but you’re not sure which direction it’s going to be. RFU Blog Post Copy Draft

Suppose a stock trades at:

$100

You buy:

$100 call

and

$100 put

If the stock makes a large enough move up or down, one side can potentially gain enough to overcome the cost of both options.

But if the stock just sits there?

That can hurt.

Because you paid premium for two options and time decay keeps working.

Mattress Money Take

This is one of those strategies where being right about volatility matters more than being right about direction.

You can correctly predict:

“Something big is about to happen.”

But if the move isn’t big enough?

You can still lose money.

Best fit:

High-event-risk situations where a large move is expected

4. Iron Condor

Now we’re getting into Snake Market territory.

An iron condor uses four options:

A short call spread + a short put spread

using the same expiration.

The structure creates a trade with defined maximum profit and defined maximum loss. RFU Blog Post Copy Draft

The goal?

You want the stock to stay within a defined range.

This is generally considered a neutral strategy. RFU Blog Post Copy Draft

Mattress Money Take

This is basically saying:

“I don’t need this stock to go up. I don’t need it to go down. I need it to calm the hell down.”

😂

That’s why the environment matters so much.

If you put on an iron condor and the stock suddenly starts trending hard?

That’s a problem.

Best fit:

Snake Market

5. Butterfly Spread

A butterfly spread uses multiple options at different strikes to create a position with:

Defined risk + defined potential profit. RFU Blog Post Copy Draft

A standard long call butterfly typically uses three strikes:

Buy one lower-strike call.

Sell two middle-strike calls.

Buy one higher-strike call. RFU Blog Post Copy Draft

The strategy works best when the underlying finishes near the middle strike around expiration. RFU Blog Post Copy Draft

Mattress Money Take

Butterflies are all about Destination.

Remember our 3D System?

Direction.

Destination.

DTE.

If you have a specific price target and believe the stock could land near that level, a butterfly can give you a defined-risk way to express that opinion.

But you need precision.

Best fit:

Snake / targeted price destination

6. Calendar Spread

This is one of my favorites conceptually because now we start using time itself as part of the trade.

A calendar spread typically uses:

The same strike

but

different expiration dates. RFU Blog Post Copy Draft

A common structure is:

Sell the shorter-dated option.

Buy the longer-dated option. RFU Blog Post Copy Draft

Because the two options have different expirations, they don’t lose time value at the same rate. RFU Blog Post Copy Draft

That means time decay becomes part of the strategy.

But don’t oversimplify it.

Calendars are also affected by:

Price.

Implied volatility.

Premium.

Expiration differences. RFU Blog Post Copy Draft

Mattress Money Take

This is where people really start understanding that options are not just:

“Up or down?”

Options let you trade:

Direction.

Time.

Volatility.

Price destination.

Sometimes all at once.

Best fit:

Snake / controlled directional outlook with a time component

7. Collar

A collar combines:

Long stock + long put + short call. RFU Blog Post Copy Draft

The put provides downside protection.

The short call generates premium that can help offset the cost of buying the put. RFU Blog Post Copy Draft

For example:

You own stock at:

$100

Buy a:

$90 put

Sell a:

$110 call

Now you’ve created boundaries around the position.

Your downside has protection.

Your upside is limited.

Mattress Money Take

This is the options equivalent of putting bumpers on the bowling lane.

😂

You’re saying:

“I want to stay in the stock, but I want some protection if things get ugly.”

This can make sense when you have meaningful gains in a stock but don’t necessarily want to sell it.

Best fit:

Bull position entering uncertain conditions

But Here’s What Most Options Traders Miss

Knowing seven strategies doesn’t make you a good trader.

Knowing when NOT to use them does.

That’s the difference.

A covered call isn’t automatically good because you own stock.

An iron condor isn’t automatically good because the stock has been sideways for three days.

A straddle isn’t automatically good because earnings are coming.

A butterfly isn’t automatically good because you have a price target.

Everything has to line up.

That’s why we evaluate:

Direction

Destination

DTE

Then we add:

Probability

Implied volatility

Liquidity

Maximum profit

Maximum loss

Break-even

Assignment risk

Time decay

Strategy Should Follow the Setup

Here’s the easiest way to remember this entire article:

Bull?

Think directional bullish strategies.

Bear?

Think bearish or defensive strategies.

Snake?

Think range-bound strategies.

Gator?

Slow down.

😂

High volatility and violent back-and-forth movement can make trades look attractive while dramatically increasing risk.

The goal is not to have a strategy for everything.

The goal is to recognize when the odds are good enough to trade at all.

And Don’t Fall in Love With the Stock

This applies here too.

When it comes to stocks, we don’t chase ’em — we replace ’em.

If the setup disappears?

Replace it.

If the stock becomes too extended?

Replace it.

If the volatility no longer supports the strategy?

Replace it.

If the risk/reward sucks?

Replace it.

There are too many stocks in the market to spend your time forcing a bad trade.

Date stocks. Don’t marry them.

Coach Micah’s Take

Options are powerful because they allow us to do much more than simply bet on whether a stock goes up or down.

We can:

Generate income.

Define risk.

Protect gains.

Trade volatility.

Trade time.

Target a price.

Lower capital requirements.

Build around stock positions we already own.

But here’s the mistake I don’t want you making:

Don’t collect strategies just to say you know them.

You don’t need 50 strategies.

You need a handful of strategies you understand so well that you know exactly:

When to use them.

Why to use them.

When NOT to use them.

And what has to happen for the trade to work.

That’s why Mattress Money starts with the market and ends with the strategy.

Not the other way around.

Find the setup.

Measure the risk.

Choose the tool.

Execute the system.

And remember:

When it comes to stocks, we don’t chase ’em — we replace ’em.

More Money. More Options.