Getting started

Options trading for beginners

Checked October 2026

An option is a contract to buy or sell 100 shares at a set price by a set date, a call to buy and a put to sell. Backtoast tested 12 published options strategies in 2026, and every one that finished failed, including a covered call that made 10.8% a year.

Backtoast

You pay $99 for two full tests of your own strategy, and a pass is an offer of 30% of the profit Backtoast makes trading it with its own money.

Buying and selling

A buyer pays the premium and can lose all of it, and a seller collects it and takes on the move. Most of the tested strategies sell premium, like the covered call strategy and the cash secured put strategy, and some cap the loss with a further option, like the iron condor strategy.

SPY and SPX

SPY options are on the fund, settle in shares and can be exercised early, so a short option in the money can be assigned before expiry. SPX options are on the index, settle in cash and can only be exercised at expiry. The Cboe rules here are written for SPX, and the runs used SPY.

What the tests show

The covered call made 10.8% a year, the cash-secured put 5.3% and the iron condor 2.0%, and all three failed. The 0DTE iron condor, which opens and expires on the same day, lost 1.2% a year.

The runs are Backtoast's, from 29 October 2026, after costs. The full list is options trading strategies tested in 2026.