The investment world has got many areas available to investors for getting a high revenue as a result. One such area is options trading that offers a high return for traders. But it is important for beginner traders to keep in mind certain strategies to get profitable returns. They must focus on breaking down the rewards and risks in options trading to earn a massive amount of money.
Buy a Long Call
Traders can easily buy a long call if there is a chance for the stock price to increase beyond the strike price before the expiration limit. In the case of soaring stocks, investors can get returns manifold times on their investment. It is suitable to go for a long call if the stock market is expected to boom massively before the expiration of the option.
A covered call makes a trader sell a call option but also owns stock in a tricky way to reduce the risk in it. It is a suitable option for investors for earning income when they know that the stock value is not going to rise much in the future.
When it is obvious that the stock price will be below the strike price at the time of expiration then it is considered a suitable strategy to buy a put.
It is considered a good idea to opt for this strategy when a trader expects the stock to rise more than the strike price by expiration.
Before investing in options trading, it is important for traders to know about the pros and cost of options trading in great detail. It is actually a better way to invest than stock trading.