{"id":195,"date":"2022-07-25T12:53:52","date_gmt":"2022-07-25T16:53:52","guid":{"rendered":"https:\/\/kingtradingsystems.com\/blog\/?p=195"},"modified":"2023-02-18T12:04:55","modified_gmt":"2023-02-18T17:04:55","slug":"trading-options-for-beginners","status":"publish","type":"post","link":"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/","title":{"rendered":"Trading Options for Beginners: Here are 5 Basic Types of Options Trades To Get You Started"},"content":{"rendered":"<p>Trading options for beginners can be a difficult task. After all, there is new terminology to learn, new strategies to apply and a host of new, well, options to look into.<\/p>\n<p>It can seem overwhelming when you&#8217;re looking for the <a href=\"https:\/\/kingtradingsystems.com\/best-stocks-options-advisory-service-reviews.php\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;best option trading alert services&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:6659,&quot;3&quot;:{&quot;1&quot;:0},&quot;4&quot;:{&quot;1&quot;:2,&quot;2&quot;:16777215},&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Roboto, RobotoDraft, Helvetica, Arial, sans-serif&quot;}\">best option trading alert services<\/span><\/a>.<\/p>\n<p>Which is why we&#8217;ve put together a list of a few of the most commonly asked questions when it comes to trading options, as well as listing the most common option trades.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_are_options\" title=\"What are options?\">What are options?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_call_option\" title=\"What is a call option?\">What is a call option?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_put_option\" title=\"What is a put option?\">What is a put option?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_naked_call\" title=\"What is a naked call?\">What is a naked call?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_straddle\" title=\"What is a straddle?\">What is a straddle?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_spread\" title=\"What is a spread?\">What is a spread?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_a_butterfly\" title=\"What is a butterfly?\">What is a butterfly?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_is_an_iron_condor\" title=\"What is an iron condor?\">What is an iron condor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#What_are_the_5_basic_types_of_options_trades\" title=\"What are the 5 basic types of options trades?\">What are the 5 basic types of options trades?<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_are_options\"><\/span>What are options?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Options &#8211; or an option contract &#8211; gives the buyer the right, but not the obligation, to buy or sell an underlying security or instrument at a specific price on or before a certain date. As a result, options trading is the process of buying and selling options contracts on financial instruments.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_call_option\"><\/span>What is a call option?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A call option is a contract that gives the holder the right, but not the obligation, to buy a security or other asset at a fixed price (the &#8220;strike price&#8221;) within a certain period of time. When buying a call option, an investor is betting that the price of the underlying stock will increase.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_put_option\"><\/span>What is a put option?<img loading=\"lazy\" class=\"alignright size-thumbnail wp-image-198\" src=\"https:\/\/kingtradingsystems.com\/blog\/wp-content\/uploads\/2022\/07\/options-trading-for-beginners-150x150.png\" alt=\"options trading for beginners\" width=\"150\" height=\"150\" \/><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A put option is a contract that gives the holder the right to sell a security at a specific price within a certain time frame. The put option buyer pays a premium to the seller for this right. When buying a put option, an investor is betting that the price of the underlying stock will decrease.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_naked_call\"><\/span>What is a naked call?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A naked call is a type of options strategy in which the trader sells a call option without owning the underlying asset. This is a high-risk, high-reward strategy that can lead to substantial losses if the underlying security moves in the wrong direction.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_straddle\"><\/span>What is a straddle?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An options straddle is a type of options trade that involves buying a call option and a put option with the same strike price and expiration date. This strategy is used when the investor thinks that the stock will experience significant volatility in the near future.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_spread\"><\/span>What is a spread?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An options spread is the purchase of one option and the sale of another option of the same class and expiration date but with different strike prices.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_butterfly\"><\/span>What is a butterfly?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An options butterfly is a type of options trade that involves buying two at-the-money options and selling one higher and one lower strike option. This trade profits if the underlying security moves a specific amount in either direction.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_an_iron_condor\"><\/span>What is an iron condor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An iron condor is a type of options strategy that involves buying two out-of-the-money put options and selling two out-of-the-money call options with the same expiration date. This strategy is designed to generate a limited amount of profit while also limiting the amount of potential losses.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_5_basic_types_of_options_trades\"><\/span>What are the 5 basic types of options trades?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><strong>Long call: <\/strong>A long call is a type of <a href=\"https:\/\/kingtradingsystems.com\/best-stocks-options-advisory-service-reviews.php\">option trade<\/a> in which the trader buys a call option and hopes that the underlying stock will rise in price. If the stock price does rise, the call option will increase in value, allowing the trader to sell it at a profit.<\/li>\n<li><strong>Short Call:<\/strong> A short call is a financial investment strategy that allows an investor to profit from a decrease in the price of a security. The investor does this by selling a call option. If the price of the security decreases, the investor can purchase the security at the lower price and sell the call option at a higher price, resulting in a profit.<\/li>\n<li><strong>Long put: <\/strong>A long put is a type of option trade where the trader buys a put option and hopes that the price of the underlying security falls below the strike price by the time the option expires. If this happens, the trader can then exercise the option and sell the security at the strike price, making a profit.<\/li>\n<li><strong>Short put:<\/strong> A short put is where an investor sells a put, essentially betting that the price of the security they sell the put on will increase. By doing this, they collect premium (money) upfront as soon as they enter the trade.<\/li>\n<li><strong>Covered Call: <\/strong>A covered call is a financial investment strategy that involves buying shares of stock and then selling call options against those same shares. This strategy is used to generate income from the option premiums while still maintaining exposure to upside potential in the underlying security.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Trading options for beginners can be a difficult task. After all, there&#8230;<\/p>\n","protected":false},"author":1,"featured_media":196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[22,10,9],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Trading Options for Beginners : Here&#039;s How to Get Started<\/title>\n<meta name=\"description\" content=\"In this article trading options for beginners we give you 5 perfect strategies to get you started on your trading journey\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trading Options for Beginners : Here&#039;s How to Get Started\" \/>\n<meta property=\"og:description\" content=\"In this article trading options for beginners we give you 5 perfect strategies to get you started on your trading journey\" \/>\n<meta property=\"og:url\" content=\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/\" \/>\n<meta property=\"og:site_name\" content=\"King Trading Systems\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-25T16:53:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-18T17:04:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/kingtradingsystems.com\/blog\/wp-content\/uploads\/2022\/07\/Trading-Options-for-Beginners-Here-are-5-Basic-Types-of-Options-Trades-To-Get-You-Started.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"990\" \/>\n\t<meta property=\"og:image:height\" content=\"476\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"KingLion\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"KingLion\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/\",\"url\":\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/\",\"name\":\"Trading Options for Beginners : Here's How to Get Started\",\"isPartOf\":{\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/#website\"},\"datePublished\":\"2022-07-25T16:53:52+00:00\",\"dateModified\":\"2023-02-18T17:04:55+00:00\",\"author\":{\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/#\/schema\/person\/d34e2dc84337760a8c5dda423bc46ab2\"},\"description\":\"In this article trading options for beginners we give you 5 perfect strategies to get you started on your trading journey\",\"breadcrumb\":{\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#breadcrumb\"},\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/trading-options-for-beginners\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/kingtradingsystems.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Trading Options for Beginners: Here are 5 Basic Types of Options Trades To Get You Started\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/kingtradingsystems.com\/blog\/#website\",\"url\":\"https:\/\/kingtradingsystems.com\/blog\/\",\"name\":\"King Trading Systems\",\"description\":\"Stock &amp; 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