The German lawyer Christian Czirnich has unique results in his options trading – specializing in setting up risk-free options trades :

He says that his trading returns about 20% profit per year – without any risk of losses.

No risk? Yes, that is what he explains. Christian has focused on an options strategy that for many years did not work but is now back in favor.

Watch Christian explain how he sets up risk-free options trades

The video was produced with Streamyard – an easy-to-use and amazing tool for live streaming and recording.

Who is Christian Czirnich?

Christian is a 60-year-old lawyer and options trader from Munich, Germany. With 20+ years of trading experience, he specializes in low-risk strategies that leverage options pricing mechanics, earning 20%+ annual returns while protecting capital.

“I am risk-averse,” he says – which is why he researched how he could set up trades with no possibility for loss at expiration.

The basis of risk-free options trades

To grasp Christian’s trading strategies, you need to know two things about how options are priced:

1. Understand the principles of Put/Call parity

The first is to understand Put/Call parity. In short Put/Call parity is a principle that defines the relationship between the price of European put and call options of the same class.

It is beyond the scope of this article to explain Put/Call parity in detail. But one main point is that any position with calls, puts or shares can be replaced with a combination of the other two.

Here is how:

• Long put = short stock + long call
• Long call = long stock + long put
• Short put = long stock + short call
• Short call = short stock + short put
• Long stock = long call + short put
• Short stock = long put + short call

At the core of Christian’s strategies is to make a synthetic replacement of one of the options positions in well-known options trading strategies. How he does this is explained in the video.

Christian recommends watching this video from the Options Industry Council to better understand Put/Call parity.

2. Understand that interest rates are priced into options

The second you need to understand is that interest rates are priced into options. This is measured by the lesser-known options greek Rho. Here is an explanation of how the interest rates affect the options prices.

For many years, the interest rates were so low that most options traders did not concern themselves with this relationship. It did not have any meaningful impact on the options prices.

But that has changed during the last years as the interest rates have come up to meaningful levels.

This means, says Christian, that with debit trades you are paid the Fed Fund interest rate for your positions, while you are charged the same rate with credit trades. He explains how this plays out with an example in the video.

How risk-free options trades are possible

All of Christian’s strategies are based on replacing options positions with owning shares in the underlying. He looks for trades where the interest rates can lift the loss zone to always be profitable.

Here is one example of what he does – similar to what he explains in the video:

The starting point: A call butterfly

This illustration is from OptionStrat – a great tool to help options traders set up good trades.

In this example, we have used OptionStrat to create a call butterfly on SPY. It expires in 81 days – and is composed of selling two 525 calls and buying the 500 call and the 550 call. The trade profits if the price of SPY at expiration ends close to the shorts. If the price moves beyond the breakeven points, we will have a small loss. The max loss is 278 dollars.

The adjusted trade: Replacing the lowest call with 100 shares and a long put

This illustration is from OptionStrat – a great tool to help options traders set up good trades.

Using the Put/Call parity principles, Christian then replaces the lowest call with 100 shares of SPY and a long put. This creates a new profit/loss curve that has the same shape but is lifted. By doing this we no longer can lose at expiration. We now have a minimum profit of 289 dollars.

The difference, as Christian explains in the video, is that we are paid the Fed Fund interest rate in the second example. That is enough to lift the previous loss zone into positive territory.

Christian’s goal with this call butterfly is to place the peak of the profit curve where he believes the market will move. If he is right, he will make a very good profit. But for him, it is reassuring to know that even if he is wrong, he will make a small profit. He says this is all about preserving his capital.

Other strategies to create no-loss options trades

Christian goes through several other options strategies that can create risk-free options trades in the video. They include calendars, call condors, and an intriguing way to trade earnings with no possibility for loss.

Watch the full video to study the other examples – and also how Christian manages his trades.

Options trading book recommendations

I asked Christian to recommend a couple of options trading books. He suggests Lawrence G. McMillan. He is a professional trader who regularly appears on media like CNBC and Bloomberg.

• Lawrence G. McMillan: Options as a Strategic Investment

• Lawrence G. McMillan: McMillan on Options

---

Three recommended tools for options traders

Option Omega – popular and reliable tool for backtesting

Tradingview – the fastest way to follow markets

OptionStrat – trade smarter with the best visualization and analysis tools available