Options trading has become increasingly popular among retail investors, especially those looking to generate consistent income, manage risk, and gain more control over their portfolios than traditional stock investing alone.
That said, options can feel overwhelming for beginners. The good news is that you don’t need to learn everything at once. By mastering a few core, time-tested strategies, new traders can build confidence and trade with structure rather than emotion.
At Dorian Trader, we specialize in practical options strategies designed to help beginners trade with discipline, risk management, and long-term sustainability.
In this 2026 beginner’s guide, we’ll walk through five foundational options strategies every new trader should understand.
A covered call is a neutral to mildly bullish options strategy that involves selling a call option against shares of stock you already own. Each call contract is backed by 100 shares of the underlying stock, which limits risk compared to selling a naked call.
Covered call traders benefit from time decay, as the value of the call option decreases over time, allowing the option to expire worthless or be bought back for a lower price.
The max profit of a covered call is the premium received plus any stock appreciation up to the call’s strike price. The max loss is similar to owning the stock outright, reduced slightly by the premium collected.
If the stock remains below the strike price at expiration, the call expires worthless and the trader keeps the full premium. If the stock rises above the strike, the shares may be called away at the agreed price.
A cash-secured put is a neutral to bullish strategy that involves selling a put option while holding enough cash to purchase the shares if assigned. This strategy is often used by traders who want to buy stock at a lower price while collecting premium.
Like other short premium strategies, cash-secured puts benefit from time decay, which reduces the value of the option as expiration approaches.
The max profit is the premium received from selling the put. The max loss occurs if the underlying stock goes to zero and is equal to the strike price minus the premium received, multiplied by 100.
If the put expires worthless, the trader keeps the full credit. If assigned, the trader purchases the shares at an effective price lower than the strike due to the collected premium.
A collar strategy is a conservative options strategy that combines owning stock, selling a call option, and buying a protective put option. It is designed to limit both upside and downside risk.
The short call helps finance the cost of the protective put, reducing or sometimes eliminating the net cost of protection. Time decay works in favor of the short call, while the long put provides downside insurance.
The max profit is capped at the call strike price plus the premium received. The max loss is limited and defined by the difference between the stock price and the put strike, adjusted for net premium.
If the stock stays within the collar range, the strategy helps preserve capital while generating modest income and protection.
An iron condor is a neutral options strategy that involves selling an out-of-the-money call spread and an out-of-the-money put spread on the same underlying and expiration date.
Iron condors benefit from time decay and range-bound price movement, allowing the trader to profit if the underlying stays between the short strikes.
The max profit is the total premium collected from both spreads. The max loss is limited and defined as the width of one spread minus the premium received.
If the underlying price remains within the defined range at expiration, all options expire worthless and the trader keeps the full credit. Losses occur if the price moves beyond either spread.
The Bionic Bull is a bullish options strategy designed to participate in upward price movement while managing downside risk more efficiently than owning stock outright.
This strategy typically combines long stock or bullish option exposure with short premium components, allowing traders to offset cost and reduce risk through structured positioning.
The max profit depends on the underlying’s upward movement and the strategy’s specific structure. The max loss is predefined and generally lower than an unhedged bullish position.
The Bionic Bull benefits from controlled risk, defined expectations, and is best suited for traders who are bullish but still prioritize risk management.
No matter which options strategy you choose, whether it’s a covered call, cash-secured put, collar, iron condor, or a bullish structure like the Bionic Bull, successful options trading always starts with the right foundation.
Before placing your first trade, there are three core areas every beginner should focus on.
Options are built around two contracts: calls and puts. Each behaves differently depending on price movement, time, and volatility. Understanding how premium, expiration, and assignment work is essential before applying any strategy.
When you understand how options behave, strategies stop feeling complex and start making logical sense.
An options trading plan defines what you trade, when you trade, and how much risk you take. It should be aligned with your financial goals, available capital, and personal risk tolerance.
A well-defined plan helps remove emotional decision-making and keeps your trading consistent, even during volatile market conditions.
Every options trade involves risk, which is why risk management should always come before profit expectations. Knowing your maximum potential loss, position size, and exit criteria is critical.
Understanding option Greeks, such as Delta, Theta, and Vega, can help you better assess how price movement, time decay, and volatility may impact your positions.
Options trading is not about finding the perfect strategy, it’s about using the right strategy in the right conditions with proper risk control. When approached with education, structure, and discipline, options can be a powerful tool for both income generation and portfolio protection.
At Dorian Trader, we focus on helping new traders build confidence through:
1. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.