Option strategies are structured ways of using options contracts to express a market idea while defining risk and expectations in advance. At a beginner level, strategies are typically built to simplify decision-making by answering a few key questions upfront: what direction is expected, how much risk is acceptable, and how much time the trade has to work. Rather than relying on guessing price movement, option strategies combine elements such as buying or selling calls and puts, selecting expiration dates, and managing position size to create defined outcomes. For newer traders, these strategies help bring discipline to the process by limiting risk, encouraging planning before entry, and reducing emotional decision-making once a trade is active. When used thoughtfully, beginner option strategies serve as a framework for learning how probability, time, and volatility interact, while keeping the focus on process, documentation, and gradual improvement rather than short-term results.
During the beginner phase of this trading journey, the focus is intentionally limited to a small number of straightforward option strategies. Rather than attempting to learn multiple complex approaches at once, attention is placed on strategies that emphasize defined risk, simplicity, and repeatability. The beginner strategies are being used as learning tools, with the goal of building a strong foundation before exploring more advanced option structures in the future. The option strategies outlined below will be used during the initial learning phase:
Covered Call Strategy
Covered call is an options strategy that begins with owning shares of a stock and then selling a call option against those shares. By selling the call, a premium is collected upfront, which provides income and some downside cushion if the stock price stays flat or declines slightly. In exchange, the upside is capped if the stock rises above the strike price, making covered calls a structured way to generate income while holding shares. Very Simple Calculator to better understand Covered Calls (Premium, Break-Even, and Max Profit).
Using Barrick Mining Co. as an example, if you purchased 100 shares at an average price of $42.50 and sold a $49.00 strike call for a $1.33 per share premium, the calculator identifies three key metrics: the Total Premium ($133.00), the Breakeven Point ($41.17, calculated by subtracting the premium from the purchase price), and the Maximum Profit ($783.00, which is the premium plus the gain if the stock is exercised at the strike price).
Calculated Outputs
The calculator generates these three key figures:
1. Total Premium Received: $133.00
• Calculation: $1.33 (Premium) × 100 (Shares)
2. Breakeven Point: $41.17
• Calculation: $42.50 (Purchase Price) – $1.33 (Premium)
3. Maximum Profit: $783.00
• Calculation: ($49.00 Strike – $42.50 Purchase Price) + $1.33 Premium = $7.83 per share.
• Total: $7.83 × 100 shares.
Give the calculator a try to visualize your next covered call strategy!!!!
Covered Call Calculator
Total Premium: $–
Breakeven: $–
Max Profit: $–
Wheel Strategy
I would also covered the Wheel strategy as a secondary beginner option Strategy. Here is a little Preview: Wheel strategy builds on this concept by combining cash-secured puts and covered calls into a repeatable process. It typically starts by selling a put on a stock that is acceptable to own, potentially leading to assignment and share ownership. Once shares are owned, covered calls are sold to generate income, continuing the cycle while managing risk and maintaining defined expectations throughout each step. See the Post about the Option Wheel Strategy (Beginner).
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The information on this website is provided for educational and informational purposes only and does not constitute financial, investment, or trading advice. Options trading involves substantial risk and is not suitable for all investors. Past performance is not indicative of future results.