Citadel’s Strategy Anyone Can Use — Vertical Spreads

The primary option strategy favored by traders, based on feedback and statistics, is Vertical option spreads, encompassing both credit and debit spreads. In my own day trading experience, I’ve utilized the Credit spread variant, where the option spread premium is promptly credited to the trading account.

Within the realm of vertical spreads, derivative strategies such as Butterfly and Iron Condor are generally not recommended for novice traders due to their complexity.

There are two main types of Credit Spreads commonly employed in options trading:

1. Bull Put Spread for upward directional trading.
2. Bear Call Spread for downward directional trading.

Vertical spreads inherently represent a directional option strategy.

It’s advisable not to fixate solely on market behemoths like Tesla, Apple, and Google. For daily options trading, the option SPX-index with 0DTE (Zero Days To Expiration) is of interest.

In navigating the PDT (Pattern Day Trader) rule, where only three trades are permitted per week with less than $25,000 available for trading, leveraging 0DTE options allows for circumvention. This involves initiating a position with a Credit Spread that expires at the conclusion of the trading session.

For a comprehensive understanding of utilizing Bull Put and Bear Call spreads, please refer to the Trading System chapter below for further details.