Simple and Easy Options Trading Strategies

1. Buying Calls (When You Think Prices Will Go Up)

• Think of a call option like a ticket that lets you buy a stock at a set price.

• Use this if you believe the stock price will rise before the option expires.

• Example: If a stock is at ₹100 and you buy a call option for ₹5 with a strike price of ₹110, you’ll profit if the stock goes above ₹115 (strike price + option cost).

2. Buying Puts (When You Think Prices Will Go Down)

• A put option is like a ticket to sell a stock at a set price.

• Use this if you believe the stock price will drop before the option expires.

• Example: If a stock is at ₹100 and you buy a put for ₹5 with a strike price of ₹90, you’ll profit if the stock drops below ₹85.

3. Covered Call (Earn While Holding Stocks)

• If you own shares of a stock and think the price will stay steady or rise slightly, sell a call option on it.

• You keep the premium (the price you get for selling the option), even if the stock doesn’t move much.

• This is a great way to make extra money on stocks you already own.

4. Cash-Secured Put (Earn While Waiting to Buy a Stock)

• If you want to buy a stock but at a lower price, sell a put option.

• You’ll get paid the premium upfront, and if the stock price drops, you’ll buy the stock at your desired price.

• Worst case? You still get the stock, but cheaper than its current market price.

5. Iron Condor (For Calm Markets)

• Use this when you think the market won’t move much.

• You sell one call and one put option, then buy another call and put further away to limit risk.

• It’s like betting on the market staying quiet—you profit if the stock doesn’t move much.

6. Straddle (For Big Moves, Up or Down)

• If you think a stock will move a lot, but you’re unsure of the direction, buy both a call and a put at the same strike price.

• Example: Before big news or earnings, this strategy helps you profit whether the stock jumps up or drops down sharply.

7. Vertical Spreads (Limit Risk and Cost)

• This is like a smarter version of buying calls or puts.

• Instead of buying one call or put, you also sell another one with a higher or lower strike price to reduce your costs.

• This limits your profit but also keeps your risk low.

8. Keep it Simple: Know Your Limits

• Start small. Don’t overtrade or take big risks at the beginning.

• Learn one strategy at a time until you feel comfortable.

Bonus Tip: Always Have a Plan

Decide upfront: How much are you willing to lose? When will you exit a trade? Stick to your plan, no matter what.

Discover simple and easy options trading strategies designed for beginners and experienced traders alike. Learn how to use strategies like buying calls and puts, covered calls, cash-secured puts, and iron condors in straightforward, human-friendly language. Master the basics of risk management, profit potential, and when to use each strategy to trade smarter and more confidently in the options market.