Common Option Strategies for Beginners

 

Common Option Strategies for Beginners

There are many predefined options strategies, but knowing this will not make you a successful trading, having out of the box techniques will help.

Options aren’t just for speculation — they are tools for income, hedging, and directional bets.

Top Popular Strategies:

1. Covered Call:
   Own a stock → sell a call → earn premium while keeping upside limited.

2. Protective Put:
   Own a stock → buy a put → insurance against downside.

3. Bull Call Spread:
   Buy low strike call → sell higher strike call → reduce cost and risk while profiting from moderate rises.

4. Bear Put Spread:
   Buy high strike put → sell lower strike put → profit from moderate falls, limited risk.

5. Iron Condor (Advanced Beginner):
   Sell call, put spreads and buy OTM puts and calls→ profit in range-bound markets → limited risk and reward.

6. Iron Fly or Iron Butterfly :  Sell ATM call, put and buy OTM puts and calls→ profit in range-bound markets → limited risk and reward.

7. Straddle :  Sell ATM call, put→ profit in range-bound markets → unlimited risk and limited reward.

8. Straggle :  Sell OTM or Far OTM call, put→ profit in range-bound markets → unlimited risk and limited reward.

Strategy Tips

• Start with spreads before moving to naked options

• Always know your maximum profit and loss

• Track market movement and Theta

🎯 Key Takeaway:

    Options allow flexible strategies to match market outlook and risk appetite. Don’t jump into naked positions without mastering spreads first.