To be successful, you want to know what to trade, know the direction of the market and the direction of the underlying asset that you’re are trading. You have to be comfortable with the stock and learn how it trades from one cycle to another and then you have to figure out the most optimal strategy that gives you highest Probability of Success.
Statistically speaking, the strategy with the highest Cost Basis Reduction gives you the highest Probability of Success. The further away you are selling your Strikes from where the underlying stock is trading, the higher the Probability of Success and hence the better the Strategy. So, buying Puts and Calls is a strategy with low Probability of Success. This is probably one of the reason why most option traders lose money when they begin trading, as they are having to pay too much premium for these Puts and Calls when Implied Volatility is high.
On the other hand, selling Naked Puts and Calls has a high Probability of Success, involves higher Risk, but gives you the best results when there is a lot of uncertainty in the market. When Implied Volatility in relative terms is high, selling Naked Puts and Calls makes sense because you will get more premium for the options. But since they also present lot of risk, it is best to find a more suitable middle ground strategy. Vertical Spreads, Calendar Spreads, Condors are all such conservative strategies with high Probability of Success, but with the lowest amount of Risk.
The right strategy is be more conservative in the beginning, and once you get more experienced with a better understanding of Probability of Success and how to defend your position aggressively, then you can start doing the more complicated strategies such as Flies, Spreads and Iron Condors.
Tradespoon provides you with trade customizing tools such as Trade Builder in Figure 20, which allows to select a trigger, the time horizon, the amount of money you want to invest and the Probability of Success you want to pursue. It will then recommend the Optimal Strategy with the highest probability of profit. Always target a Probability of Success with 60%-80% and use Tradespoon Short Term Trend. And note that reducing the Cost Basis by setting out of the money spreads is the optimal strategy.