Are options a good strategy for a beginner investor?

Options trading may sound risky or complex for beginner investors, and so they often stay away. Some basic strategies using options, however, can help a novice investor protect their downside and hedge market risk. Here we look at four such strategies: long calls, long puts, covered calls, protective puts, and straddles.

What are options trading strategies?

Options trading might sound complex, but there are basic strategies that most investors can use to enhance returns, bet on the market's movement, or hedge existing positions. Covered calls, collars, and married puts are used when you already have an existing position in the underlying shares.

What are options strategies?

But what all options strategies have in common is that they’re based on two fundamental option types: calls and puts. (If you don’t already have a strong understanding of these terms, be sure to learn the basics of call options and put options.) The best option for beginners is to keep it simple.