Become a better options trader

Learn about the world of options and how they might be used to implement your strategy.

Options can be powerful investing instruments to help generate income, manage risk, and trade volatility. Beginner strategies, such as buying and selling options, demonstrate how these securities provide dynamic alternatives to traditional investments. More advanced strategies offer unique and tactical ways to capitalize on trends in the market. This series of Viewpoints can help you find an options trading strategy that aligns with your market outlook, no matter your experience level.

The basics

Five tools to research stocks
Here’s how you can analyze investment opportunities using powerful tools and resources.
Buying calls
Call options grant you the right to control stock at a fraction of the full price.
Selling options
You can potentially earn upfront income by selling options—but there are significant risks.

Picking the options contract

How to pick the right expiration date
A delicate balance between time and cost is at the heart of this critical choice.
Hitting the right strike price
Here are a few ways to pick the optimal strike price when buying or selling options.
LEAPS and bounds
An options strategy for short-term traders and longer-term investors.

Valuation tools

Get to know the Greeks
Use these tools to enhance your options trading proficiency.
The power of delta
Learn how this Greek can help you assess the probability of making a profit.
An IV for your options strategy
If you trade options, implied volatility can help you identify stocks that could move.
Option trading entails significant risk and is not appropriate for all investors. Certain complex option strategies carry additional risk. Prior to trading options, you must receive from Fidelity Investments a copy of "Characteristics and Risks of Standardized Options," by clicking on the hyperlink, and call 800-FIDELITY to be approved for option trading. Supporting documentation for any claims, if appropriate, will be furnished upon request.
There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, and collars, as compared with a single option trade.
Greeks are mathematical calculations used to determine the effect of various factors on options.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, Rhode Island 02917
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Generating income

How to sell covered calls
This relatively simple options strategy can potentially generate income on stocks you own.
An income option: the covered call
This strategy can help you potentially generate income on stocks you own.

Bullish strategies

The bull put spread
Capture profits from a rising stock while putting a limit on potential losses.
The bull call spread
A strategy designed to take advantage of price gains while potentially limiting risk.

Bearish strategies

The bear call spread

Volatility strategies

Put a collar on this market
Here's a sophisticated options strategy designed to limit losses and protect gains.
Option trading entails significant risk and is not appropriate for all investors. Certain complex option strategies carry additional risk. Prior to trading options, you must receive from Fidelity Investments a copy of "Characteristics and Risks of Standardized Options," by clicking on the hyperlink, and call 800-FIDELITY to be approved for option trading. Supporting documentation for any claims, if appropriate, will be furnished upon request.
There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, and collars, as compared with a single option trade.
Greeks are mathematical calculations used to determine the effect of various factors on options.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, Rhode Island 02917
659971.1.0

Volatility strategies

The calendar spread
Here's how to capture opportunities created by volatility with the calendar spread.
Trade like a butterfly
Read about this limited-risk option strategy that can help you manage volatility.
Adjust your options
How to manage high and low volatility using ratio spreads, an advanced options strategy.
The iron condor
When volatility is low, consider taking advantage of this advanced options strategy.
Option trading entails significant risk and is not appropriate for all investors. Certain complex option strategies carry additional risk. Prior to trading options, you must receive from Fidelity Investments a copy of "Characteristics and Risks of Standardized Options," by clicking on the hyperlink, and call 800-FIDELITY to be approved for option trading. Supporting documentation for any claims, if appropriate, will be furnished upon request.
There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, and collars, as compared with a single option trade.
Greeks are mathematical calculations used to determine the effect of various factors on options.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, Rhode Island 02917
659971.1.0