When it comes to vehicles for traders, stocks options are by far the most popular. This is because they allow traders and investors to keep the risk involved in the trade low, while also allowing them to make huge gains. Options trading can become very complex and intimidating, especially for beginners. But learning the basics will help you get started quickly and easily.
Here are three stock options trading strategies for beginners.
The Long Call
This is the most popular of the options trading strategies, and for good reason. The long call involves buying a stock at one price, while also selling an option that gives you the right to buy that same stock at another price on or before a certain date in the future. The goal of this strategy is to get your stock to go up in price, so you can sell it for more than you paid for it.
The Short Call
The short call is very similar to the long call. The one big difference is it involves selling a call instead of buying one. If both calls are out of money when expiration arrives, your losses are limited to the amount you received when selling the option.
The Covered Call
If you already own a stock, then the covered call is almost identical to the short call. The only difference is you get to keep the stock you already own, even if it goes up in price.
To learn more about stock options trading strategies for beginners, contact Trade Genie Inc. at tradegenie.com