Top 5 Options Trading Strategies Every Beginner Must Learn Before Their First Trade

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Options Trading Strategies

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June 30, 2025

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An option is a financial contract that enables investors to buy or sell an underlying instrument like stock or index at a predetermined price within a specific expiry date in exchange for payment of premium by the buyer and seller. Understanding the concept of options and how they are traded is essential for making a profit and putting a cap on the losses against your investment. Here are the top 5 options trading strategies that every trader should know before investing in the derivative market. 

Top 5 options trading strategies 

For all the strategies below, ensure the options are based on the same underlying security and have the same expiry date.

  1. Bull Call Spread

A bull call spread is a bullish options trading strategy where a trader will buy a long call with a lower strike price and one short call with a higher strike price. For example,

Buy 1 Call of ABC  100 with premium at (4.50)Sell  1 Call of ABC 105  with premium at  2.50Net debit or Net premium paid is (2.50-4.50)= (2.0)Maximum Profit = (105-100)-2.0= 3 per shareMaximum Risk = Net premium paid
  1. Bull Put Spread

Bull put spread is an option trading strategy when you are moderately bullish on the market. For a bull put spread, buy a short put with a higher strike price and a long put with a lower strike price.

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Sell 1 Put of ABC  105 with a premium at 4.50Buy 1 Put of ABC 100 with premium at  (2.50)Net credit is (4.50-2.50)=2.0Maximum Profit = Net credit receivedMaximum Risk = (105-100)-2.0 =3 (per share)
  1. Bear Call Spread

Bear call spread comprises one short call having a lower strike price and one long call having a higher strike price. This option trading strategy is best suited when the market outlook is bearish.

Sell 1 call of ABC  100 with premium at 4.50Buy 1 call of ABC 105 with premium at  (1.50)Net credit is (4.50-1.50)=3.0Maximum Profit = Net credit receivedMaximum Risk = (105-100)-3.0 =2 (per share)
  1. Bear Put Spread

Bear put spread option trading strategy is preferable when the market is expected to slightly decline. This strategy consists of a long put option with a higher strike price and a short one put option with a lower strike price. 

Buy 1 Put of ABC  105 with premium at (4.50)Sell 1 Put of ABC 100 with premium at  1.50Net debit or Net premium paid is (4.50 -1.50)=(3.0)Maximum Profit = (105-100)-3.0= 2.0 (Per share)Maximum Risk = Net Premium paid
  1. Long Call Butterfly Spread

Long Butterfly trading strategy is perfect for neutral market prediction. It consists of buying 1 long call option at a lower strike price, selling 2 call options at a higher strike price, and buying 1 another call option at a strike price even higher than that. 

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Buy 1 ABC call 100 with premium @ 7.0           –  (7.0)Sell 2 ABC call 105 with premium @ 4.0            –  8.0Buy 1 ABC call 110 with premium @2.0            – (2.0)Net cost (-7.0-2.0+8.0) =(1.0) Maximum Profit = (105-100)-1.0 = 4.0Maximum Loss= Net cost 

Learn more about options trading strategies and understand how to make profit from Get Together Finance. Consider the right trading strategy considering a bullish or bearish trend of the market to maximize the profit.

Last modified: June 30, 2025

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