Options Trading for Beginners: 8 Strategies Plus Advice from Financial Experts

Options trading for beginners might seem confusing, but it can be a money-making strategy to add to your investing toolkit if you’re an experienced trader.

You might have heard about people making money by trading options and want to give it a shot but don’t know exactly what it is.

Here are eight of the most common options strategies to learn about if you’re considering this type of investing.

1. Buying Calls

Buying calls is one of the most common option trading strategies. When you buy a call option, you gain the right to purchase shares of a stock at the strike price before the expiration date.

Covered calls are a popular way for long-term investors to generate short-term income on their holdings.

2. Covered Calls

If you’re unsure whether a stock will go up or down, but you’re convinced that it will experience a lot of short-term movement, employ the long straddle option trading strategy.

3. Long Straddles

Traders who think the price of a stock will fall can use a long put strategy. The term “long” can be confusing in this context, but it just refers to the act of the trader buying an option and hoping to profit from it in the future.

4. Buying Puts

5. Short Put

The maximum profit for the short put strategy is the premium price paid on the put. However, the losses could be significant, especially if the security falls well below the strike.

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