• Options strategies take advantage of the market's volatility for consistent returns.barbie street image by Roques Jean Chris from Fotolia.com
  
  If the market is in a period of high volatility, you have to account for that in your investment evaluation. The reason is that investors have to be able to count on consistent returns, which can be difficult with certain stocks. But fortunately, there are options strategies for volatile markets. Stock options have a degree of flexibility when creating winning option-spread positions that are easily implemented and take advantage of the volatility.
  
  

Option Straddles

• Option straddles profit on runaway moves in either direction.chart background image by Stasys Eidiejus from Fotolia.com
  
  Option straddle positions use a combination of call and put options to capitalize on a stock's explosive price movement. A put option is an agreement to sell a stock at a specified price within a specific period and profits when the stock goes down in price. A call option is an agreement to buy a stock at a specified price within a specific period and profits when the stock goes up.
  
  The option trader places put positions at a lower price point and the call positions at an upper price point. For example, a pharmaceutical company is awaiting an FDA ruling on a new drug--if approved, the stock could take off or, if denied, could plummet. The straddle takes advantage of both price directions.
  
  

Bull Put Spreads

• Option traders use bull put spreads in a bullish market to create a consistent income stream.business graph image by Olaru Radian-Alexandru from Fotolia.com
  
  When an option trader spots a stock on an upward trend, he can create a bull put spread to earn income on the move. By selling a higher-priced put and collecting the premium, then buying a lower priced put option to hedge against risk, the option trader benefits from both the stock's trend and the time decay which is the ratio of the change in an option's price to the decrease in time to expiration.
  
  He creates income by keeping the premium on the higher-price put he sold and using part of it to buy insurance by purchasing the lower priced put option.
  
  

Bear Call Spread

• Using the bear call option spread, the option trader creates a stream of income during a downward trend with little risk.stocks and shares image by Andrew Brown from Fotolia.com
  
  Option traders use bear call spreads when a stock is in a downward trend, creating a bear call spread to earn income on the move. By selling a higher-priced call option and collecting the premium, then buying a lower-priced call option to hedge against risk, the option trader benefits from both the stock's trend and the time decay which is the ratio of the change in an option's price to the decrease in time to expiration.
  
  He creates income by keeping the premium on the higher-price call he sold and using part of it to buy insurance by purchasing the lower-priced call option.