From OptionMonster Education:
Basic Options Strategies with Examples
1. Profit from stock price gains with limited risk and lower cost than buying the stock outright
Example: You buy one Intel (INTC) 25 call with the stock at 25, and you pay $1. INTC moves up to $28 and so your option gains at least $2 in value, giving you a 200% gain versus a 12% increase in the stock.
2. Profit from stock price drops with limited risk and lower cost than shorting the stock
Example: You buy one Oracle (ORCL) 20 put with ORCL at 21, and you pay $.80. ORCL drops to 18 and you have a gain of $1.20, which is 150%. The stock lost 10%.
3. Profit from sideways markets by selling options and generating income
Example: You own 100 shares of General Electric (GE). With the stock at 34, you sell one 35 call for $1.00. If the stock is still at 34 at expiration, the option will expire worthless, and you made a 3% return on your holdings in a flat market.
4. Get paid to buy stock
Example: Apple (AAPL) is trading for 175, a price you like, and you sell an at-the-money put for $9. If the stock is below 175 at expiration, you are assigned, and essentially purchase the shares for $166.
5. Protect positions or portfolios
Example: You own 100 shares of AAPL at 190 and want to protect your position, so you buy a 175 put for $1. Should the stock drop to 120, you are protected dollar for dollar from 174 down, and your loss is only $16, not $70.