Basic Options Strategies

Overview

Once you understand single options, you can combine them. A covered call earns income on shares you already own. A bull call spread is a cheaper, capped way to position for a moderate rise.

Key takeaways

• A covered call sells a call against shares you hold to earn the premium.
• A bull call spread buys one call and sells a higher one to cap cost and reward.
• Spreads define your risk versus buying a single naked option.
• Each strategy has a maximum profit and loss you can work out before you enter.

For education only. Not investment advice.