Part 2 Ride The Big Moves

Basic Option Strategies
For Beginners

Long Call – Buy call, profit if price rises.

Long Put – Buy put, profit if price falls.

Covered Call – Own stock and sell call, earn premium.

Protective Put – Own stock and buy put to protect against downside.

Intermediate Strategies

Straddle – Buy call + put at same strike, profit from volatility.

Strangle – Buy OTM call + put, cheaper than straddle.

Bull Call Spread – Buy lower strike call, sell higher strike call.

Bear Put Spread – Buy higher strike put, sell lower strike put.

Advanced Strategies

Iron Condor, Butterfly Spread, Calendar Spread – mainly for experienced traders looking for defined risk/reward.

Advantages of Option Trading

Leverage: Small investment controls large position.

Hedging: Protect stock portfolios.

Flexibility: Profit in rising, falling, or sideways markets.

Limited Loss: Buyers lose only the premium paid.

Risks in Option Trading

Premium Loss: 100% loss if option expires worthless.

Time Decay: OTM options lose value fast near expiry.

Complexity: Advanced strategies require precise planning.

Unlimited Risk: Selling naked calls can be disastrous.