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Beginner guide to nine options strategies, ranked by risk
The guide explains key option mechanics, including how standard equity contracts cover 100 shares and how premiums and expiration affect outcomes.
Yahoo Finance outlines nine options trading strategies for beginners, ordered from lower to higher risk, and frames the piece as a risk-first primer before placing a first options trade.
The article walks through core building blocks of options contracts, including the standard equity contract size of 100 shares, what call and put options represent, and how strike price, expiration date, and premium work.
It also defines common option moneyness terms, such as in the money, at the money, and out of the money, and notes that out of the money options can expire worthless if the stock price stays unfavorable through expiration.
The piece further covers how some strategies can cap losses at the premium, while others can expose traders to more substantial downside depending on how the market moves.