Orwell - I think one needs to be an expert firstly in keeping out of trouble with options. That means knowing exactly where the risks are.
I've seen people get hurt leaving a long option to expire because it's almost worthless (or because they have forgotten about it) and then it gets assigned because of auto exercise at expiry and the find they have a very large stock position on their hands and if the market is in a down trend, it can be far more costly than the small debit risked when purchasing the call option. That's on individual stocks and, again where index options remove that risk of owning stock.
I've seen people hurt holding in the money short calls on ex-dividend day where they find their short call has been assigned and they are then required to pay the dividend. It's explained HERE.
That's just a couple of doozies I can think of right now but knowing how to keep out of trouble is extremely important. There are enough challenges to make a profit without unnecessarily losing significant funds!
Butterflies are a lower probability of profit, however, they can be useful at times. They can be legged in and the strikes can be altered in all sorts of ways. The main aim of the butterfly is to capture theta decay, however, it certainly does have a narrow range of profit. I don't always put the entire position on. More of this later as I have to go out for a while now...
Neo, I did trade US options with Think or Swim for a while, but found the night time trading just too difficult when other responsibilities didn't allow for sleep during the day. I find XJO options more liquid than Aussie stock options.
Yes ratio spreads can work well and again, like Orwell said, IV is an important factor and even more so with ratio spreads, imo.
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