Options Trading in Singapore: A Beginner’s Guide to Calls, Puts, Covered Calls, and Cash-Secured Puts

January 2, 2026

Options trading can look overwhelming at first. Terms like “call”, “put”, “covered call”, and “cash-secured put” sound complex, but each strategy follows a simple logic once you break it down.

This guide explains the major types of options trades that beginners actually use, how each strategy works, the risks and benefits involved, and how to place each type step-by-step.

If you’re looking to understand options in a practical, grounded way, this article is your starting point.

What Exactly Is an Option?

An option is a financial contract that gives you a choice—the right, but not the obligation—to buy or sell a stock at a specific price (the strike price) before a certain date (the expiration).

You can think of options as tools that let you express a view about where a stock might go, or as a way to manage risk without always needing to buy or sell shares outright.

There are only two fundamental types:

Call options give you the right to buy a stock at the strike price.
Put options give you the right to sell a stock at the strike price.

Every other strategy—covered calls, cash-secured puts, spreads, collars—comes from combining these basic building blocks with the shares you own.

Unlike stocks, which involve owning a piece of a company, options give you flexibility. You can use them to:

Try to profit from price movements
Protect your portfolio
Generate income
Enter a stock position at a better price

This makes options a versatile addition to an investor’s toolkit, but it’s also why understanding the mechanics is so important.

1. Buying a Call Option: A Simple Way to Benefit from a Stock Moving Up

Buying a call option is one of the most straightforward ways to use options. When you purchase a call, you’re paying for the right to buy a stock later at a price you select today. This appeals to investors who believe a stock is likely to rise but don’t want to commit the full amount needed to buy shares.

How Buying a Call Works

Imagine that a stock is trading at US$100, and you expect it to rise over the next month. Instead of spending US$10,000 to buy 100 shares, you might choose to buy a call option that costs US$300. This call lets you buy the stock at, say, US$105 anytime before expiration.

If the stock rises to US$120, your call becomes valuable because you’re holding the right to buy at US$105. If the stock doesn’t rise above that level, your maximum loss is the US$300 premium you paid.

Let’s say you’re bullish on NVIDIA (NVDA) ahead of an earnings announcement. The stock is priced at US$120. You buy a one-month call option with a strike price of US$125 for US$4.00 (or US$400 total).

If NVIDIA rises to US$135:
The option now has US$10 of intrinsic value. Your US$400 premium has grown significantly. You can sell the option for a profit.
If NVIDIA stays below US$125:
The call expires worthless. You lose your US$400 premium, but nothing more.

Understanding the Trade Step by Step

Choose the stock you want exposure to.
Look at the options chain and select “Buy Call.”
Choose a strike price based on how far you expect the stock to move.
Select an expiration date that gives your view enough time to play out.
Review the cost (premium) and maximum loss.
Place your trade.

Call options are appealing because they offer limited downside and potentially large upside, but they only work if the stock moves enough within the timeframe you’ve chosen.

2. Buying a Put Option: Profiting From or Protecting Against a Downtrend

Buying a put option works in the opposite direction of a call. A put gives you the right to sell a stock at a fixed price. Investors buy puts either to profit from an expected decline or to protect shares they already hold from falling too sharply.

How Buying a Put Works

If a stock is trading at US$200 and you buy a put with a strike of US$190, you have secured the right to sell at US$190 even if the stock falls much lower.

If the stock declines to US$170, the put becomes valuable because your contract gives you a higher guaranteed selling price.

Suppose you hold shares of Tesla (TSLA) and are concerned about short-term volatility. TSLA trades at US$190. To protect your position, you buy a US$185 put for US$3.50 (US$350 total).

If TSLA falls to US$170:
Your put increases in value because it allows you to sell at 185. This gain helps offset the drop in your share price.
If TSLA stays above 185:
Your maximum loss is the premium you paid. You can think of it as insurance that you ended up not needing.

Step-by-Step Guide to Buying a Put

Select the stock you want to hedge or bet against.
Open the options chain and choose “Buy Put.”
Pick a strike price that aligns with your risk tolerance.
Choose an expiration date (longer dates provide more protection).
Confirm how much the premium costs and what your maximum loss is.
Place the trade.

Beginners often use long puts as a way to add downside protection without selling their shares.

3. Selling a Covered Call: Earning Income from Stocks You Already Own

A covered call is a strategy where you sell a call option on shares you currently hold. This generates premium income in exchange for agreeing to sell your shares if the stock rises beyond a certain price.

This strategy is popular among long-term investors because it adds an income component to a portfolio, even if the stock’s price doesn’t change much.

How a Covered Call Works

You must own at least 100 shares of the stock. When you sell a call option, you receive a premium upfront. In return, if the stock rises above your strike price, you may be required to sell your shares at that predetermined level.

Assume you own 100 shares of Apple (AAPL) at US$180. You sell a one-month call with a strike of US$190 and receive US$200 in premium.

Two outcomes can happen:

If AAPL stays below U$S190:
The call expires worthless, and you keep both your shares and the US$200 premium.
If AAPL rises above US$190:
Your shares may be “called away” at US$190. You still keep the premium, and you earn the capital gain from 180 to 190.

Covered calls work best in calm or moderately rising markets where you’re comfortable selling your shares at a higher price.

How to Sell a Covered Call Step by Step

Hold at least 100 shares of the stock.
Open the options chain and select “Sell Call.”
Choose a strike price above your current share price.
Pick an expiration that matches your income plan (weekly or monthly).
Check your potential assignment price and premium received.
Submit the order.

Covered calls are widely considered one of the most beginner-friendly income strategies available.

4. Selling a Cash-Secured Put: A Smart Way to Buy Shares at a Discount

Selling a cash-secured put is one of the simplest ways to use options to enter a stock position at a price you prefer. You sell a put option and set aside enough cash to buy 100 shares if the option is assigned.

If the stock stays above your strike price, you simply keep the premium and repeat the process.

How It Works

Say a stock trades at US$400, but you would prefer to buy it at US$380. You could sell a US$380 put and collect a premium for being willing to buy the shares at that level. You reserve the US$38,000 needed in case of assignment.

If the stock doesn’t fall to 380, you keep the premium. If it does, you buy the shares at the price you wanted.

Let’s assume Microsoft (MSFT) trades at US$400. You sell a put with a strike price of US$380 and receive US$400 in premium.

If MSFT stays above 380:
You keep the US$400 premium. No shares are purchased.
If MSFT drops below 380:
You are assigned 100 shares at US$380, effectively entering the position at a discount while still keeping the premium.

This strategy is ideal for long-term investors who already want to buy the stock but prefer a lower entry price.

Step-by-Step Guide

Select a stock you would be comfortable owning.
Open the options chain and choose “Sell Put.”
Pick a strike price below the current market price.
Ensure you have the required cash reserved.
Confirm the premium received and the terms of assignment.
Place the order.

Cash-secured puts are a disciplined alternative to placing a limit order, with the added benefit of collecting income.

Choosing the Right Strategy as a Beginner

Each strategy has a clear purpose:

Buy calls if you expect a stock to rise and want limited risk.
Buy puts if you expect a decline or want to protect your holdings.
Sell covered calls if you already own shares and want to earn income.
Sell cash-secured puts if you want to buy shares at a lower price while collecting premium.

Once you understand how these four foundational trades work, you have the building blocks for almost every options strategy you will ever encounter.

Explore Options Trading with Syfe

Options are not inherently high-risk or complicated. They become powerful when used with the right purpose—whether that’s generating income, protecting your portfolio, or entering a position more strategically. For Singapore investors, options can complement long-term investing by offering flexibility that traditional stock purchases cannot.

Syfe’s options trading experience is designed for clarity and confidence, especially for beginners. With intuitive tools, transparent costs, and educational resources, you can learn, explore, and execute options strategies in a way that fits your goals.

If you’re ready to take your next step into options, explore the upcoming options trading experience on Syfe.