5 Options Trading Strategies for Beginners [Higher Return, Lower Risk]

Stock Market

Everything you need to know to trade options and five options strategies that will lower your risk and make more money. You will definitely want to bookmark this video for reference.

Options can seem too complicated for beginners. I know it was one of my least favorite subjects while studying for the Chartered Financial Analyst (CFA) designation. These stock derivatives can be your best strategies though for lowering risk on stocks and making more money. For example, on one option trade, I was able to make over $18,000 on SPY put options that helped offset the stock market crash in March.

And these options trading strategies really aren’t that difficult to understand once you get the basics down. There are only two types of options, calls and puts. Once you understand the basics, you can mix and match them to do anything and become a professional investor.

I’m making this video an all-in-one guide to options investing. We’ll start with everything you need to understand options basics, an options trading for beginners course that will set you up for those strategies. I’ll cover lots of options examples using Apple and Tesla to make it all easily understandable.

I’ll then show you how to invest in options and different scenarios when options trading is better than stocks. Finally, I’ll reveal the five options trading strategies I use to reduce risk and make higher returns.

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I’ll leave a clickable index below if you want to jump around but please watch the whole video. You need to understand the options trading basics if you’re going to use the trading strategies to their full potential.

This is an extremely long video. Give yourself some time, book mark the video and watch it a couple of times to make sure you fully understand each strategy. I guarantee, spend the time you need to learn this options trading tutorial and it will be a tool you use constantly to make better investing decisions.

0:00 Options Trading for Beginners
2:38 What are Options? Options are called derivatives because they derive their price from another investment, in this case from the price of a stock.
3:00 Apple Options Example
5:10 What are Call Options? Call options give you the right to buy shares of stock at a certain price (strike price) on a certain day. For this right, you pay a premium to buy the call option.
7:00 What are Put Options? Put options give you the right to sell shares of stock at a certain price on a certain day.
7:54 Why Do Investors Use Options? Options can help you make leveraged returns, reduce risk in an investment and profit from direction of a stock price either higher or lower.
8:47 Options Trading Basics
9:00 Options Trading Definitions: Expiration, Strike Price, In-the-Money, Out-of-the-Money
Options Trading Strategies
15:00 What are Call Options?
15:40 Pros and Cons of Call Options Trading
16:38 What are Put Options?
17:40 What is a Cash-Secured Put Option Strategy?
21:00 Covered Calls – involve buying shares of the stock and selling call options to offset a near-term loss of price.
30:50 Protective Puts – involve buying shares of stock and buying put options to protect completely from a downside in the shares.
35:45 Option Spreads – involve buying or selling puts and calls for the same month and are a great way to profit from the direction of stock prices while cutting the cost of buying options.
42:45 Option Straddles – involves buying both the call and put options and give you the opportunity to profit from a large move in shares of a stock.
46:35 Option Collars – involve the protective put options trading strategy along with the covered call at the same time to reduce the overall cost.
50:05 How to Trade Options

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.

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21 Comments

  1. I'll be covering three of my favorite options strategies for 2021 in Sunday's livestream @2pm EST…Don't miss it! 💰 Check out these 10 Financial Ratios EVERY investor must know! https://youtu.be/hiRjnyQyHj4

  2. Thanks Joseph for this great video! Do you always wait for the options to expire? or is it possible to get out of it before? If yes, what happens?

  3. Thanks for the informative video. I have a question; If I want to buy a stock that I like to keep for the long term, then does it make sense to sell a put option that is a year out expiration date in order to collect a high premium and get assigned with the stock? For example, stock XYZ trades at $100 today and I sell a put option $95 to collect a $12 premium. Within a week, stock XYZ dropped to $90 so I get assigned at $95, which ended up buying the XYZ at $83. Is this correct or are there any rules that I'm not aware of?

    Thanks for sharing your insight.

  4. Most of the stock options expire worthless, that means that option buyers lose money on average and option sellers make money on average. So selling options has better odds of making money. Since options have a expiration date, everyday their price on average will go down. This is beneficial to option sellers, not the buyers. Although rewards for the option buyers can be greater, if they guess the price movement right, its a high risk strategy, as time to get the desired price movement is limited.

  5. Selling a Call against shares owned you can not lose money on the Call, you can only lose/reduce profit, correct? (and of course you can lose on the stock shares).

  6. Great video thank you I've watched probably close to 100 options videos and just couldn't Grasp more than buying and selling calls until I watched your video, I understood selling calls & puts perfectly.

  7. Trading has impacted a lot of lives these days and quite a number trading firms have emerged over the years, I’ll advise people to make investment

    Nobody becomes a millionaire or billionaire by working for others and depending on them ,good investment breed millions of dollars and consistency breed Billions

  8. This one of the best summarized options video I have seen, thank you Joseph! What I like the most is that you broke it down in chapters and you use your own examples of the strategies. Great content, keep it up Joseph!!

  9. I'm wanting to accelerate growth of my account and later on convert to a dividend strategy for retirement income.

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