10 Best Investing and Trading Strategies to Use Right Now

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Financial markets in 2025 have been rocky, with all the inflation, recession, stagflation worries, geopolitical chess moves, tariff implications, and fluctuating interest rate policies. The CBOE Volatility Index (VIX) is off the charts. After surging to $52.33 on April 8th, 2025, the “fear gauge” now trades at a more subdued, yet still alert, $17.24 as of May 16th, 2025. For astute investors, options contracts—calls and puts—offer a versatile toolkit to navigate such turbulence, hedge risks, generate income, or position for specific outcomes. Here are ten options trading strategies to consider in the current climate.

Covered Calls: Generating Income from Holdings

If you own stocks you believe have limited short-term upside but are happy to hold long-term, writing covered calls can be an effective income-generating strategy. You sell call options against your stock holdings (100 shares per contract). The premium received from selling the call provides an immediate income stream. This strategy becomes even more attractive in a volatile market where option premiums can be inflated. The risk is that if the stock price rises above the strike price, your shares may be called away, capping your upside on the stock for that period.

Protective Puts: Insuring Your Portfolio

Protecting your existing stock portfolio is paramount given the recession anxieties and recent VIX spikes. Buying protective puts acts like an insurance policy. You purchase put options on stocks you own, giving you the right to sell your shares at a predetermined strike price, thereby limiting your downside risk if the stock price falls. The cost of the put (the premium) reduces your overall profit if the stock rises. However, in uncertain times like these, the peace of mind and capital preservation offered by this strategy can be invaluable, especially for highly appreciated positions.

Cash-Secured Puts: Acquiring Stocks or Earning Income

For investors looking to buy a specific stock at a lower price than its current market value or to generate income, selling cash-secured puts is a viable strategy. If it gets assigned, you sell a put option and set aside enough cash to buy the stock at the strike price. If the stock price stays above the strike, the option expires worthless, and you keep the premium. If the stock price falls below the strike and you’re assigned, you buy the stock at an effective price below its value when you sold the put.

Long Calls: Bullish Bets with Limited Risk

Despite broader market uncertainty, specific companies may present strong growth prospects. A long call option allows you to bet on a stock’s price increase with a relatively small capital outlay compared to buying the stock outright. Your maximum loss is limited to the premium paid for the call option. This strategy is best used when you have a strong bullish conviction on a particular stock and expect a significant upward move before the option expires. While lower than its peak, the current VIX at $17.24 suggests option premiums might be elevated, so careful selection is key.

Long Puts: Profiting from or Hedging Against Declines

Buying long puts can be a direct way to profit if you anticipate a specific stock or the broader market will decline due to recession fears or other negative catalysts. A long put gives you the right to sell the underlying asset at a specific strike price before expiration. Like long calls, your maximum loss is limited to the premium paid. This strategy can also hedge a broader portfolio if you don’t want to buy puts on every individual holding, for instance, by buying puts on a market index ETF.

Long Straddles: Capitalizing on Major Price Swings

A long straddle can be appropriate when you expect a significant price movement in an underlying asset but are unsure of the direction, perhaps around a major geopolitical announcement or key interest rate decision. This involves buying a call option and a put option on the underlying asset with the same strike price (typically at-the-money) and expiration date. Profit is achieved if the stock moves substantially in either direction, exceeding the total premium paid. The VIX’s recent dramatic range highlights that such sharp moves are possible.

Iron Condors: For Range-Bound Expectations

If you believe a stock or index will trade within a specific range despite the broader “persistent uncertainty,” an iron condor offers a way to profit from this neutrality and time decay. This strategy involves selling an out-of-the-money (OTM) call spread and an OTM put spread simultaneously on the same underlying asset with the same expiration. You collect a net premium, which is your maximum profit. The maximum loss is also defined. This strategy benefits if the underlying stays between the short strikes of the call and put spreads.

Bull Call Spreads: Defined-Risk Bullish Strategy

For a moderately bullish outlook on a stock, a bull call spread offers a lower-cost, risk-defined alternative to an outright long call. This involves buying a call option at a specific strike price and simultaneously selling another call option on the same underlying asset with the same expiration date but at a higher strike price. The premium received from selling the higher-strike call reduces the net cost of the position. Your maximum profit is capped (the difference between the strikes minus net debit), as is your maximum loss (the net premium paid).

Bear Put Spreads: Defined-Risk Bearish Strategy

Conversely, if you have a moderately bearish outlook on a stock, a bear put spread provides a risk-defined way to profit from a price decline. You buy a put option at a specific strike price and sell another on the same underlying asset with the same expiration but at a lower strike price. The premium received from selling the lower-strike put reduces the overall cost. Your maximum profit is capped (difference between strikes minus net debit), and your maximum loss is limited to the net premium paid.

Collar Strategy: Protecting Gains with Limited Cost

Investors holding a stock that has appreciated significantly might use a collar to protect these gains, especially when facing market headwinds like potential tariffs or interest rate hikes. This strategy involves holding the underlying stock, buying an out-of-the-money (OTM) protective put, and selling an OTM covered call. The premium received from selling the call helps finance the cost of buying the put, sometimes resulting in a zero-cost collar. This locks in a price range, limiting downside losses and capping upside gains on the stock for the options’ duration.

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