{"id":8883,"date":"2022-11-24T19:49:45","date_gmt":"2022-11-24T11:49:45","guid":{"rendered":"https:\/\/slashtraders.com\/?p=8883"},"modified":"2025-09-29T17:45:20","modified_gmt":"2025-09-29T09:45:20","slug":"beginner-options-trading-strategies","status":"publish","type":"post","link":"https:\/\/slashtraders.com\/en\/blog\/beginner-options-trading-strategies\/","title":{"rendered":"Mastering Options: 10 Simple Strategies for Beginners"},"content":{"rendered":"

You can learn options trading<\/a> to increase leverage in your trades, and also use it to protect your long-term investments, and limit your risks in times of high market volatility<\/a>.<\/p>\n\n\n\n

We share our favourite options<\/a> strategies for beginners to shorten their learning curve, become advanced options traders and use new trading tools to find new ways to profit.<\/p>\n\n\n\n

Use Covered Call to Reduce the Cost of Stock Purchase<\/h2>\n\n\n\n

Covered Call<\/a> is an options trading strategy that hedges against a long stock position by selling OTM Call to collect a premium if the stock price doesn't rise.<\/p>\n\n\n\n

When we combine buying 100 stocks with selling a Call option, we get a Covered Call strategy. The premium received from the short Call can reduce the cost of the stocks, and increase your chance of profit.<\/p>\n\n\n\n

If the stock price increases past the Call strike before expiration, the 100 stocks will be sold at the strike price for a profit to compensate for the loss of the Call trade.<\/p>\n\n\n<\/p>\n\n\n\n

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A Covered Call is when we combine buying 100 stocks with selling a Call option and use the premium received from the short Call to reduce the cost of the stocks .<\/figcaption><\/figure>\n\n\n

<\/p>\n\n\n\n

So a Covered Call caps the future upside of the stocks in exchange for the income from selling options.<\/p>\n\n\n\n

If we want to hold onto a value stock<\/a> for the long term, but are afraid of a bearish trend, we can trade the Covered Call to hedge our position.<\/p>\n\n\n\n

Use Cash Secured Put To Buy Stocks at a Discount<\/h2>\n\n\n\n

Cash Secured Put<\/a> is an options strategy that requires holding cash reserves of 100 stocks while selling a Put option.<\/p>\n\n\n\n

Let's check out the profit analysis of selling an OTM Cash Secured Put option. We receive a premium when selling a Put. As long as the stock price does not drop below the strike price before expiration, the Put option value expires worthless, and the premium received becomes our profit.<\/p>\n\n\n\n

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Maximum profit of the Cash Secured Put option is the premium.<\/figcaption><\/figure>\n\n\n\n

The Put option will be exercised if the stock price drops below the strike price.<\/p>\n\n\n\n

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We are forced to purchase 100 stocks if the stock price drops.<\/figcaption><\/figure>\n\n\n\n

This means we are forced to purchase 100 stocks at the cost of the strike price less the premium received.<\/p>\n\n\n\n

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Cost per share = strike price - premium<\/p>\n<\/blockquote>\n\n\n\n

Selling Cash Secured Put options is part of the Wheel Strategy, and a good long term strategy to buy-and-hold stocks<\/a>.<\/p>\n\n\n\n

In a bullish trend, we can continue to sell Cash Secured Puts for income through premiums. In a bearish trend, we would purchase the stocks at the strike price, which is lower than the original market price, then wait for the blue-chip stock<\/a> to bounce back in the future.<\/p>\n\n\n\n

Use Poor Man\u2019s Covered Call to Reduce the Buying Power of Covered Call<\/h2>\n\n\n\n

Poor Man's Covered Call<\/a> combines a long deep ITM long-term Call and a short OTM Call option.<\/p>\n\n\n\n

A Poor Man's Covered Call on BABA uses only $3,825 in buying power, less than half of the Covered Call:<\/p>\n\n\n\n