Best Options Strategies for Beginners

Once you understand what calls and puts are (if not, start with What Is Options Trading?), the next question is: what do you actually do with that knowledge? This guide walks through the options strategies beginners should learn first, in the order that makes sense to learn them.

Before You Pick a Strategy

Every options strategy is really just a combination of two building blocks: buying/selling calls, and buying/selling puts. What makes a "strategy" is the specific combination and the goal behind it — betting on direction, generating income, protecting a position, or limiting risk.

Beginners should start with the simplest strategies — the ones with clearly defined risk — before touching anything involving multiple simultaneous positions or uncapped downside. Every strategy below is beginner-appropriate if you understand the mechanics first.

Long Calls and Long Puts

The simplest options strategy is just buying a single call or put — what's called a "long" position. This is usually the first strategy any new trader learns, because it directly mirrors the basic call/put concept.

• Long call: You buy a call because you expect the stock to rise. Your risk is limited to the premium paid; your potential reward is theoretically unlimited as the stock climbs.
• Long put: You buy a put because you expect the stock to fall. Same risk profile — capped loss, and profit increases as the stock drops (though it's capped at the stock reaching zero).

The appeal here is simplicity: one contract, one directional bet, one clearly defined maximum loss. The tradeoff is that you're fighting time decay the entire time you hold the position — the stock has to move enough, quickly enough, to overcome the erosion in the option's value as expiration approaches.

Covered Calls

A covered call is one of the most common income-generating strategies, and it's popular with beginners because it's less risky than it sounds. Here's how it works:

1. You already own 100 shares of a stock.
2. You sell (write) a call option against those shares, collecting a premium upfront.
3. If the stock stays below the strike price, you keep the premium and keep your shares.
4. If the stock rises above the strike price, your shares may get "called away" (sold) at that strike price — meaning you still profit, just with your upside capped.

The "covered" part of the name is what makes this different from riskier option-selling strategies: because you already own the shares, you're not exposed to unlimited risk if the stock rises sharply. Your risk is largely the same as owning the stock outright, minus the premium you collected as a cushion.

A Covered Call Example

Numbers make this much easier to picture. Say you own 100 shares of a stock currently trading at $50, which you bought a while ago. You don't expect much upward movement in the next month, so you sell one call option with a $55 strike price, expiring in 30 days, and collect a $1.50 premium — $150 total (1.50 × 100 shares).

• If the stock stays below $55: the call expires worthless, you keep your 100 shares, and you keep the full $150 premium as extra income on top of the stock itself.
• If the stock rises above $55: your shares are likely to be called away (sold) at $55 each — a $5-per-share gain from your $50 basis, plus you still keep the $150 premium. Your total profit is capped there, even if the stock keeps climbing to $70.
• If the stock falls: you still own the shares and have lost value on them, exactly as you would have without selling the call — except the $150 premium slightly cushions that loss.

That's the core trade-off of a covered call in one example: extra income and a small cushion against a drop, in exchange for capping how much you can profit if the stock takes off.

Cash-Secured Puts

A cash-secured put is the mirror image of a covered call, often used by traders who want to buy a stock but only at a lower price than where it's currently trading.

1. You set aside enough cash to buy 100 shares at your chosen strike price.
2. You sell a put option at that strike, collecting a premium.
3. If the stock stays above the strike, you keep the premium and your cash.
4. If the stock falls below the strike, you're obligated to buy 100 shares at that strike — effectively buying the stock at a discount from where it was trading when you sold the put, since you also keep the premium.

This strategy works well for traders who were planning to buy the stock anyway and want to get paid while they wait for a better entry price.

Vertical Spreads: Bull Call and Bear Put

Spreads involve buying and selling options at the same time, which reduces both your cost and your potential profit — but also reduces your risk compared to a single long option.

Bull Call Spread

You buy a call at a lower strike price and simultaneously sell a call at a higher strike price, both with the same expiration. The premium you collect from selling the higher-strike call partially offsets the cost of the call you bought, lowering your total cost — but it also caps your maximum profit at the difference between the two strikes.

Bear Put Spread

The same idea, but for a bearish (downward) bet: you buy a put at a higher strike and sell a put at a lower strike. This lowers your cost of entry compared to buying a put alone, in exchange for a capped maximum profit.

Spreads are a natural "next step" once long calls and puts feel comfortable, because they introduce the idea of trading off unlimited upside for a lower, more defined cost and risk.

How to Choose the Right Strategy

A simple way to think about it:

• Strong directional conviction, want simplicity: long call or long put.
• Already own shares, want extra income: covered call.
• Want to buy a stock at a discount, get paid to wait: cash-secured put.
• Directional bet, want lower cost and defined risk: vertical spread.

Whichever strategy you start with, practice reading the chart first — timing your entry matters just as much as picking the right strategy. Our guide on how to read candlestick charts is the natural next step.

Common Mistakes When Starting With Strategies

A few mistakes show up again and again among traders learning strategies for the first time:

• Jumping straight to spreads or selling strategies without first understanding long calls and puts thoroughly. Spreads add moving parts — understand the simple version before adding complexity.
• Picking a strategy because it sounds sophisticated, rather than because it fits the trade you're actually trying to make. The "best" strategy is the one that matches your market outlook and risk tolerance, not the most complex-sounding one.
• Ignoring what happens if you're wrong. Before entering any strategy, know exactly what your maximum loss looks like and whether you're comfortable with it — not just what you stand to gain if it works.
• Using strategies involving stock you don't actually want to own (for covered calls) or cash you weren't actually prepared to commit (for cash-secured puts). These strategies work best when you're genuinely comfortable with the underlying obligation, not just chasing the premium income.

Risk Management Comes First

No strategy on this list is "safe" in an absolute sense — every options position carries real risk. Position size, knowing your maximum loss before you enter a trade, and not risking money you can't afford to lose all matter more than which specific strategy you choose. See our guide on risk management in options trading (coming soon to the Options Strategies category) for a deeper dive.

The traders who do well long-term aren't the ones who found one "best" strategy — they're the ones who matched the right strategy to the right market conditions, sized their positions sensibly, and stayed disciplined when a trade didn't work out.

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