Basic Option Trading Strategies

Strategies you can use to make money…

Calls and puts type the essential building blocks of most option trading strategies.

Every trade is made only using Call options, only Put options, or a combination of the two.

If you are overwhelmed or excited by the number of stock trading strategies available to learn, you’ll feel the same manner about trading options then.

There are a much larger number of option strategies open to the options trader.

I’m not really a fan of info overload thus I’ll only share some of the basics with you.

One of the great benefits of stock options is their versatility. You can tailor a particular trading strategy to be conservative, aggressive, or somewhere in between.

Here are just a few of the benefits of using stock options in your overall investment plan:

You can reap the benefits of a fall or rise in stock cost without actually owning the share.
You can position yourself for a huge move around in the stock price even though you don’t know which way prices will go.
You can earn more income off of your present stock holdings.
You can purchase stocks at a lesser price what they’re trading at then.
You can protect yourself from losing profits if your stock declines in price.

Basic Option Trading Strategies

The following option strategies are meant to be an overview, and to expose you to the extreme flexibility of options. Here is my word of caution, do not become overwhelmed with the number of option strategies that you will find on the web. Pick a couple of strategies and learn whatever you can about them.

Find the technique that you want best and stay with it. At least until you make large sums of money.

This lesson explains the basics. I’ve made the majority of my money sticking with the basics just. I trade a few advanced option strategies here and there, but the basics are my bread and butter.

There are four basic option positions: long Call options (buying Call options), short Call options (selling Call options), long Put options (buying Put options), and short Put options (selling Put options).

About the Author