Did you know thirty-nine million options contracts were traded daily in 2021? The popularity of options trading is increasing because it’s an excellent way to make money from the comfort of your home.

Are you interested in trading options but don't know where to start? This blog will provide some basic options trading strategies for beginners. Whether you're looking to make a quick profit or build a long-term portfolio, you can use multiple options trading strategies that suit your financial requirements.

So read on to learn about some of the most popular options trading strategies and how you can use them to your advantage.

Use Long Calls

In a long call, you'll buy a call option on a stock that you expect to rise in price. Traders use this strategy when they are bullish and expect the stock price to rise.

To implement this strategy, you would purchase a call option with a strike price at or below the current stock price and an expiration date that gives the stock enough time to reach your price target. Your profit from the trade will come from the difference between the strike price of the option and the eventual stock price.

One thing to keep in mind with this strategy is that you are exposed to the risk of the stock price falling before the expiration of the option. To mitigate this risk, you can use stop-loss orders or limit your exposure by purchasing a small number of contracts.

Focus On Covered Call

A covered call can help you sell call options on your stock. You can generate income from your stock position while profiting from increasing stock prices. You first need to find a stock that you think will slightly go up in price soon. Then, you sell call options on that stock with a strike price marginally above the current stock price.

You can keep the premium from selling the call option if the stock price doesn't increase, and if the stock price does go up, you may have to sell your stock at the strike price, but you will also make a profit from the difference between the strike price and the current stock price. Overall, this is a relatively safe and conservative options trading strategy that can provide hefty profits if done correctly.

Long Put Is A Good Tactic For Beginners

If you're new to options trading, one strategy you may want to consider is the long put. This strategy involves buying a put option on a stock you believe will decrease in value. If the stock price does indeed fall, you will make a profit. The long put is a relatively simple strategy and is ideal for beginners.

You must choose the stock you want to bet against if you want to execute a long put. Once you've done that, you will need to purchase a put option with a strike price below the current market price of the stock. For example, let's say you believe stock A will fall from its current price of $50 per share. You could buy a put option with a strike price of $45.

If the stock falls to $40 per share, your put option will be active and worth $5 per share. You would then exercise your option and sell the stock at the strike price of $45, resulting in a profit of $5 per share. On the other hand, if stock A increases in value and is trading at $60 per share when your put option expires, you will lose the premium you paid.

When using the long put strategy, it's important to remember that you are essentially betting against the stock. As such, you should only use this strategy if you are confident that the stock will indeed fall in price.

Hire An Experienced Trading Mentor

One of the best ways to learn about options trading is to hire experienced mentors. They have been trading options for years and know all the ins and outs of the business. You can get first-hand advice and tips on successful options trading by hiring a mentor. With the US stock market tumbling in 2022, hiring mentors for trading can be very helpful for beginners.

Mentors have a wealth of experience and knowledge and can help you avoid common trading mistakes. They can also offer guidance on how to manage risk and how to make the most of your trading capital. Plus, your mentor can help you build a personalized options trading strategy that fits your unique goals and objectives.

If you're serious about becoming a successful options trader, finding a mentor should be one of your top priorities. Of course, finding a reputable and experienced mentor can be difficult, but it's worth the effort. We recommend you research thoroughly and find a reputable trading mentorship program.

Online Options Trading Training Courses Available At Affordable Rates

Looking to dive deep into the options trading world? You’re making the right decision! However, starting an options trading career on your own can be challenging. We recommend you visit Trading Mentor to get extensive trading guidance. They’ve created an excellent options trading platform for beginners where they offer one on one training sessions.

They’ve started a trading mentorship program where professionals can teach you options, forex, and stock trading. So, what are you waiting for? Choose your mentor from Trading Mentors to kickstart your options trading career.

About The Author

The author, James Forza, is a trading professional who has worked in the trading industry for over ten years. He works with Trading Mentor and trains new traders. Currently, he's assisting clients in making informed investment decisions and learning comprehensive trading tactics. He aims to revolutionize the trading industry by providing a wide range of educational resources.