What you Need to Know About Option Trading & Strategies

You can earn money and support your income on the markets in a variety of ways, and one such unique way is trading. Have you ever thought that there is a way more interesting way to make money on the stock market other than just buying and selling shares? To be honest, there are many interesting and long-term ways within trading to invest your money and withdraw it whenever needed. Trading is more than just buying and selling stocks or equities. A very profitable method like Options Trading is also there.

Also Read | The Ultimate Guide to Option Trading

Would you like to trade in Options? If yes, Bigul is the platform for experts and beginners.

One of the most common investment methods is buying and holding stocks or shares for long-term gains. However, if you are well aware of the right timings, stocks, platforms and strategies, you’ll be able to make more profit. This is called the buy-and-hold method, which can also help increase your wealth over a while.

The best part about Options Trading is that it makes you feel superior, as if you are a financial superhero with the right skills and ability to predict market moves and feel like the king of the financial business where you can forecast everything. Wish to start your investment journey? We’re here to tell you that options trading is the solution to all your prayers, and you can start your trading journey right now with Bigul, India’s best options trading platform.

Let’s Understand Options Trading

Let’s first understand what options trading is all about before digging into more detail about options strategies. Options trading is similar to playing chess on the stock market, where you can use strategy to increase gains and decrease losses. It’s comparable to having superpowers in that you can purchase or sell stocks at a fixed price and choose when to use that choice.

Options are financial contracts that provide you with the right (but not the obligation) to buy or sell an underlying asset, such as stocks, at a given price on or before a specific date. There are two types of options:

1. Call Options: These allow you to purchase an item at an agreed-upon price. Purchasing a call option indicates confidence in the asset’s potential price growth.
2. Put Options: These allow you to sell an item for an established cost. Purchasing a put option indicates your belief that the asset’s value will decline in the future.

Let’s put on our superhero hats and capes & get ready to dive into some common and basic options trading methods now that we have a basic understanding of options trading:

Let’s explore some of these strategies together:

Fundamental Option Strategies

1. Long Call: With this method, you buy a call option on an asset you think will increase in value. For instance, you could buy a call option to profit from XYZ company stock’s upward movement if you believe its price would rise.
2. Long Put: Unlike a long call, this tactic is short-term. You acquire a put option on a stock that you anticipate losing value. If you expect a decrease in the price of ABC company’s stocks, you could buy a put option and profit from the stock’s downward trend.

Don’t confuse or burden yourself; just download the Bigul app, the best trading app in India and hop on your trading journey right away!

3. Short Call: With this method, you sell a call option you do not currently possess. This pessimistic approach pays off when the stock price stays beneath the strike price. For instance, you can sell a call option and perhaps earn income if you believe the stock price of XYZ company will fall or remain unchanged.
4. Short Put: In this method, you sell a put option that you do not currently hold. You win if the stock price stays above the strike price while using this bullish method. For instance, you might sell a put option and perhaps generate money if you think ABC’s stock price will rise or remain stable.

As we mentioned earlier as well, options trading or trading, in general, is not as easy as it may seem, but it isn’t as tricky or complex that you cannot do it; you can surely start trading today; the bottom line is, you will require a team of experts and skilled traders like the ones we have at Bigul, the best trading platform in India. It’s your cue to start your trading journey with Bigul today!

Now that we’ve uncovered all the basic and common strategies, it’s time to move on to a more intermediate level: 

Intermediate Option Strategies, or should we call Traditional Way of Trading!

Understanding basic strategies is very important to dive deep into more comprehensive or detailed strategies like the ones we will discuss now. These strategies are the ones that have been in the market for a very long period now, and your fathers or maybe their fathers must have experimented with these.

Vertical Spreads: A vertical spread is an options strategy that involves buying (selling) a call (put) and simultaneously selling (buying) another call (put) at a different strike price but with the same expiration. Bull vertical spreads increase in value when the underlying asset rises, while bearing vertical spreads profit from a price decline.

The expert team at Bigul will be more than happy to guide you. Just download the best trading app on your smartphone today!

There are many different types of techniques in vertical trading strategies. However, we will be highlighting only the two relevant ones today: 

A Bear Put Strategy

In this options strategy, a trader usually understands and anticipates the market and analyses between medium to large price drops for a given security. As a result, he/she chooses to decrease the cost of keeping the option contract. This approach aims to buy put options at a high price and sell them at a lower price. Thus, the goal is to wait for the stock’s current price to decline to or near the bear put strike price.

A Bull Call Spread

A bull call spread strategy involves buying one call option and selling another at a higher strike price. They usually use this method to control their losses or increase their revenue. Their net premium outflow drops as the premium increases on traded options. As a consequence, traders’ risks are reduced.

Want to start your trading journey today? Choose Bigul, the best trading platform in India, where your funds and stocks are safe, sound and secure for as long as you want!

Now that we have shared all the essential points that need to be addressed for you to start your trading journey in Options, we wish you all the luck and success in life to get favourable results and make profits like a pro. Start your journey with the best platform in the market, Bigul. Once you start your trading journey, we assure you that you won’t be wondering why Bigul is the best choice as an options trading platform.

Also Read | Exploring Long Put Butterfly Strategies in Options Trading