High Probability Options Strategies with Low Risk and Strong Edge

Many traders want trades that win more often, even if the profits are smaller. Having many winning trades with the proper profit ratio lets the statistics work for you. That’s where high probability options strategies come in. But how do you find them, and which ones actually work? This article covers high probability options trading strategies like put selling, iron condors, and ratio spreads.

What Are High Probability Options Trading Strategies?

High probability options strategies usually aim for a 70% or higher chance of success. That edge often comes from selling premium instead of buying it. Selling out-of-the-money puts, iron condors, and ratio spreads are common examples. These setups rely on time decay and smart strike selection to tilt the odds.

Why do sellers have the advantage? Because most options expire worthless, and sellers benefit from that. Still, high probability options trading strategies don’t come without tradeoffs: profits per trade are usually smaller, and poor risk management can wipe out many small wins.

In general, if you’re looking for high probability options strategies, we have a “High probability” tag on our platform with several predefined scans for different types of traders:

Here are a few key things to watch:

• Implied volatility: higher IV means higher premiums. This means that, in general, you will want to sell options with a high IV (IV is mean-reverting, so high IV will eventually go down).
• Strike selection: farther out means higher probability of an option price to got to 0, but this will give you a lower payout.
• Breakeven distance: use % or ATR to measure “room for error.” This is a feature we have on every Option Samurai scan.
• Tools like the Black-Scholes model (B&S) help estimate the chance an option expires worthless. On our scans, the probabilities of max profit and probability of max loss are computed using the B&S model.

Even trades with an 85%-90% win rate can go wrong (especially before a major event, like an earnings report). Consistent sizing and patience are part of the edge too. 

Selling Puts with High Probability of Profit

Selling out-of-the-money puts is one of the most used high probability options strategies, especially when you’re comfortable owning the stock if assigned. It works best on quality companies, and it gives you the chance to collect premium while setting a preferred entry price.

On our screener for the options market, we’ve built several scans to help find high probability options trading strategies with solid risk-reward profiles:

Specifically, you will find:

• Dividend Aristocrat Puts: This scan filters for puts on stocks that have raised dividends for 25+ years. We require 70%+ probability of profit and a 10%+ annualized return. If assigned, the dividend yield must be at least 5%.
• Oversold Stocks, High POP: This scan finds naked puts with high probability of profit (POP) on stocks with an RSI below 30 for at least two days. The company must be strong fundamentally and have decent growth prospects.
• High Margin of Safety: This high probability options strategy sells puts more than 3 ATRs below the market on quality stocks. We require high liquidity and at least 10% unleveraged return if assigned.
• 85% Prob. of Worthless: This scan identifies cash-secured puts with 85%+ probability of expiring worthless. It uses implied volatility to calculate that and filters for companies with no expected corporate actions before expiration.

These high probability options strategies let you collect income and potentially buy good stocks at better prices. The key is sticking to strong names and using breakeven analysis to stay out of trouble.

Using Ratio Spreads as High Probability Options Strategies

Ratio spreads are a flexible way to build high probability options strategies with low upfront cost. A 2:3 ratio spread involves selling two options and buying three of another, usually further out-of-the-money. When done as a credit spread, it creates a setup with defined risk and a favorable breakeven zone.

You can see a couple of interesting scans for this strategy in the image below:

In fact, your P&L will normally look like this:

Here is what you should know about this strategy:

• Put ratio spreads work well when you expect slight downside or neutral movement. Our High Probability 2:3 Put Ratio Spread scan filters for setups with at least $100 in credit, a break-even point more than 10% away, and a high probability of profit.
• Call ratio spreads are useful when you expect limited upside. Our High Probability 2:3 Call Ratio Spread scan follows the same logic but flipped for the bullish case.

These high probability options trading strategies work best when you want:

• No upward risk (put ratio spread) or downward risk (call ratio spread)
• Wide breakeven areas
• Flexibility to adjust the ratio for different risk profiles

As with all credit strategies, managing assignment risk and checking liquidity is important. But when used on the right stocks, ratio spreads offer a strong edge with minimal exposure.

High Probability Iron Condors

Iron condors are one of the most popular high probability options strategies because they collect premium from both sides of the market. You sell an out-of-the-money call spread and put spread at the same time, creating a defined risk trade with a wide profit zone. This setup works best in sideways or low-volatility markets.

Here are some iron condor scans you may enjoy:

Specifically, these scans are:

• Riskless down Iron Condor: Can’t lose on the downside, useful when slightly bearish
• Riskless up Iron Condor: Can’t lose on the upside, useful when slightly bullish
• High probability Iron Condors: Looks for trades with 70%+ probability of max profit and 30%+ return on risk, with a profit zone at least 2 ATRs wide in both directions

Time decay helps the position as long as the stock stays in range. Always check for earnings dates, margin requirements, and IV crush potential. High probability options trading strategies like this reward traders who are patient and selective about entry points.

Read More

Check out all the predefined scans mentioned in the article:

• Sell high prob puts on Dividend Aristocrats - If assigned return will be more than 4%

• Sell OTM puts with high probability of profit on stocks that are oversold

• Sell OTM puts with high margin of safety

• High probability Naked puts (85% prob of worthless, good companies, good risk-return profile)

• High Probability 2:3 Put Ratio Spreads

• High Probability 2:3 Call Ratio Spreads

• Riskless down Iron Condor

• Riskless up Iron Condor

• High probability Iron Condors