Investment Strategies for Retail Investors Using Put option and Covered Call

Abstract

The aim of the study is to introduce same common and easy-understanding investment strategies for retail investors. It can bring people a new weapon in investment. However, people may have different reasons of using options. Some are just for speculations, however, for retail investors, investing options can not only bring me profits but also helps them hedge the risks. But in fact, I found that many people around me have a deep misunderstanding of options. They are not only afraid of options because of their high risk, but also sneered at them because of their speculative nature. Options give the impression of being short-term speculative vehicles. And the reason people are afraid of options is because of the fear of the unknown. In my analysis, we will take use of logistic regression, Discriminant analysis and analysis of long call option, short call option, long put option and short put option. Covered call and sell put are good strategies for retail investors to earn stable benefit and hedge the risk at the same time. For investors who are new to use option tools, I recommend covered call strategy.