Options trading can be a great way to maximise profits while managing risks, but it also requires the right strategies and a deep understanding of the market. Whether you're a beginner or an experienced trader, having a solid plan is essential.
Top 5 Options Trading Strategies for Beginners:
Covered Call Strategy:
A covered call is a conservative strategy in which you sell call options on assets you already own. It allows you to generate income while holding onto your stocks.
Covered Put Strategy:
This strategy involves selling put options and having enough cash on hand to purchase the stock if the buyer exercises the option. It’s a great way to generate income while preparing to buy a stock at a lower price.
Long Call Strategy:
The long call strategy is used when you expect the stock price to increase. You purchase a call option, and if the price rises above the strike price, you profit.
Long Put Strategy:
In contrast, the long put strategy is used when you expect the stock price to fall. It allows you to profit from the decline without actually selling the stock.
Butterfly Spread Strategy
The butterfly spread is a limited-risk, limited-reward strategy that involves buying and selling multiple options. It’s great for traders who expect low volatility in the market.
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