Getting into options trading can feel overwhelming, especially when faced with complicated charts and industry jargon. For beginners, the trick is not to rush. Start with easy-to-follow trading strategies and grow skills over time.
Options can be powerful when used correctly. They offer flexibility, lower upfront costs compared to stocks, and the chance to profit whether prices rise or fall. However, without the right plan, they can also go wrong very quickly.
For those aiming to build strong fundamentals, learning about structured trading strategies early on is key. And if someone wants a professional edge, considering a CFA course will help you develop serious finance skills that apply directly to options and many other investments. Let’s now jump into the best methods that suit beginners.
Understanding the Basics of Options
Before touching real trades, it’s important to understand how options work. An option gives the right, but not the obligation, to buy or sell an asset at a fixed price before a certain date.
There are two types:
- Call options (betting prices will go up)
- Put options (betting prices will go down)
Simple enough, right? Now let’s move into the real action.
1. Covered Call: A Safe Start
The covered call strategy is where most new traders begin. Here’s the idea: if someone already owns a stock, they sell a call option on it to collect a premium.
If the stock price stays flat or goes a little up, they keep the premium and their stock.
Quick Pros:
- Easy to understand
- Reduces risk slightly
- Works best in sideways markets
Possible Cons:
- Profit is capped
- Need to already own the stock
2. Protective Put: Insurance for Beginners
Think of this as buying car insurance. When someone buys a put option while owning a stock, they limit how much money they could lose.
Good Points:
- Caps downside
- Peace of mind during uncertain markets
Negatives:
- Premium cost eats into profits if stock doesn’t fall
Many experienced traders recommend using this method when holding stocks over earnings season.
3. Long Call: Simple Bullish Bet
For those who think a stock will go up, buying a long call option is the easiest way to play that belief. It’s one of the cheaper trading strategies compared to buying the actual shares. However, timing matters, and the stock must rise before the option expires.
Remember:
- Risk is limited to the premium paid.
- Profit potential is unlimited.
Best Option Trading Strategy: Bull Call Spread
The bull call spread could be the best option trading strategy for cautious optimists. Here’s how it works: buy a call at a lower strike and sell another at a higher strike.
- Lower cost than buying just a call
- Risk is limited
- Rewards are capped
Steps to set up:
- Pick a stock you believe will rise moderately.
- Buy a call at a strike price near the current price.
- Sell a call at a higher strike price.
This method fits people who like calculated risks, not gambling moves.
4. Cash-Secured Put: Earning While Waiting
If someone wants to buy a stock at a cheaper price, selling a cash-secured put is a clever method. They get paid for promising to buy the stock if it falls to their target price.
Main Benefits:
- Collect a premium
- End up owning stock at a discount
Of course, they must have enough cash in the account in case they have to actually buy the stock.
Quick Summary of Beginner Strategies
| Strategy | Best For | Risk Level |
| Covered Call | Reducing risk while holding stock | Low |
| Protective Put | Insurance during volatility | Moderate |
| Long Call | Bullish bets with limited risk | High |
| Bull Call Spread | Calculated upward bets | Moderate |
| Cash-Secured Put | Buying stocks cheaper | Low |
Intraday Option Trading Strategy: Quick Money Tactics
Intraday options trading means buying and selling within the same day. It’s risky, fast, and not for the faint-hearted. Still, with a proper intraday option trading strategy, there’s good potential.
Top Intraday Techniques:
- Momentum Trading: Jump on stocks showing strong movement.
- Breakout Trading: Trade options when stocks break key levels.
- Scalping: Take small profits repeatedly throughout the day.
Pro Tips:
- Stick to liquid options (high volume).
- Never risk more than 1–2% of total capital per trade.
- Always have stop-loss orders in place.
Watch: Imarticus Learning – Top must have skills to become CFA or ACCA?
Common Mistakes Beginners Should Avoid
These are the common mistakes you should look out for as a beginner in trading:
- Overtrading: Fewer, quality trades work better.
- Ignoring expiry dates: Options lose value fast.
- Lack of strategy: Random trades usually end badly.
- Emotional trading: Fear and greed kill portfolios.
- Not studying volatility: High volatility changes everything.
A slow and steady mindset always beats trying to hit jackpots overnight.
Quick Checklist for Picking the Right Trading Strategies
Choosing the best option trading strategy is bound to become much easier if you have this checklist in hand:
- How confident are you about the stock movement?
- What’s your risk appetite?
- Are you trading intraday or long term?
- Do you prefer income generation or capital gain?
- How much can you afford to lose?
Watch: Imarticus Learning – Top 10 Reasons to Pursue US CMA Course | Why Choose US CMA?
Final Word
Trading options can offer a real edge when done thoughtfully. Choosing beginner-friendly trading strategies builds a strong foundation for future success. By using the best option trading strategy and smart intraday option trading strategy techniques, new traders can step into the market with better confidence.
For those serious about building a full-time career in finance, the Chartered Financial Analyst Certification Program gives a rock-solid base in investment analysis, portfolio management, and professional ethics. It’s worth checking out if options trading is more than just a hobby.
FAQs
What are the easiest trading strategies for beginners?
The covered call is often considered the easiest trading strategies. It provides steady income with lower risk.
How can I pick the best option trading strategy for my goals?
Think about risk appetite, market view, and whether you want income or capital growth.
Is intraday option trading strategy profitable?
It can be, but it’s highly risky. Beginners should practice with virtual accounts first.
How much money do I need to start options trading?
It depends, but starting with at least £500–£1000 gives some flexibility without too much risk.
Why do options lose value over time?
Options suffer from something called time decay. Every day that passes makes options slightly less valuable if the stock price stays the same.
What is the most common mistake beginners make?
Trading without a clear plan and letting emotions take over
Are online courses worth it for learning options trading?
Yes, structured courses like those from Imarticus Learning can speed up understanding and avoid expensive mistakes.