PCR Trading Strategies

Beginner-Friendly Option Trading Strategies

Here are the most important beginner strategies every new trader should know.

Covered Call Strategy (Low-Risk Income Strategy)

Best for: Beginners who already own stocks.

Market Outlook: Neutral to slightly bullish.

How it works:

You own 100 shares of a stock.

You sell a call option on the same stock.

Example:

You own Infosys shares at ₹1600.

You sell a call option with strike price ₹1700 for a premium of ₹30.

If Infosys stays below ₹1700, the option expires worthless, and you keep ₹30 per share as profit.
If Infosys rises above ₹1700, you sell at ₹1700 (still a profit because you bought at ₹1600).

✅ Pros: Steady income, limited risk.
❌ Cons: Profit capped if stock rallies big.

Protective Put (Insurance Strategy)

Best for: Investors who fear stock downside.

Market Outlook: Bullish but worried about risk.

How it works:

You own stock.

You buy a put option as insurance.

Example:

You own TCS shares at ₹3600.

You buy a put option at strike ₹3500 for ₹50 premium.

If TCS falls to ₹3300, your loss on stock is ₹300, but your put option gains value, protecting you.

✅ Pros: Protects against big losses.
❌ Cons: Premium cost reduces profits.