4 best stock option strategies for beginners to know

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Stock option strategies
4-stock-option-strategies-Livolife.com

When you decide to choose best stock option strategies, you simply feel like flying in the air. These option strategies behave like the characters of a fantasy movie. Sometimes you see them in Harry porter series while sometimes you see them in The Game of Thrones. Be that as it may, they are based on two fundamental options types; calls and puts.
So how would you know which the best stock option strategy is for you? Here are few successful option strategies you should consider while investing.

The long call

In this amazing stock option strategy, you have to buy a call option. This simple gambling strategy makes sure that you will be above the shine price by expiration. Those who don’t care about losing the entire premium are the real champs who consider the long call strategy. A long call strategy has the ability to earn you more profit than if you acquired the stock directly. If you are a beginner, then you may not find it appropriate but many traders use a long call option rather than owning numerous stock shares as it gives them an edge over their downside.

The long put

‘Long Call’ and ‘Long put’ seem to be quite similar to the word ‘Long’ is used for both these stock option strategies. If we see strategy-wise, then also both these options are amazing and are quite similar for traders.

In a long call option, you gamble on a rising stock while here it’s little different- you have gambled on a stock’s decline. If you don’t care much about losing your entire premium, a long put stock option strategy is a Broadway for you drive your dreams.

In this stock option strategy, traders earn more by acquiring or owning puts than they would be selling stocks. A Long put strategy is well known among traders as a saving strategy that limits the potential losses of theirs.

The short put

It has already been mentioned above that stock option strategies are like the characters of fantasy movies. Here comes an amazingly effective stock option strategies which are just opposite of the long put, strategy. This strategy preaches that the stock will stay calm or shout loud until expiration. The short put can be a wager on a rising stock like the long call option but there will be significant changes.

The short put stock option strategy is popular among most investor as an income generating strategy. Some investors also use this strategy to sell their premium to other investors who bet about the falling of the stock.
The short put strategy is also used by investors to bet on a stock’s appreciation. But for beginners, it is little messy as it goes more downside if the stock falls, unfortunately.

The covered call

This stock option strategy can be divided into two parts. In this strategy, an investor can’t sell a call on the stock if it doesn’t own the underlying stock.

This strategy is not much different than the short put strategy as it preaches that the stock will stay flat or just rise downward until it’s expired.

The trader can keep the stock and can write a new covered call if the stock goes below the strike price while the trader has to deliver the shares to the buyer if the stock goes above.

Bottom Line

At the end, all these successful strategies can only work if the investor utilizes his skills. These stock option strategies are opportunities and they just need to be grabbed by a firm hand.

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