Learn option strategy from Duan Yongping: Recently, I have seen many friends researching options. It reminds me that recently, the big shot Duan Yongping's sale of Nvidia attracted great attention in the market, especially the way Lao Duan laid out Nvidia, which has sparked heated discussions: Lao Duan bought 100000 shares of Nvidia at a price of 116.7, and sold a one-year Nvidia call option at a strike price of $120, 100000 shares at a premium of $2.4 million per share. The option expires on March 20, 2026. What effect can his combination of operations achieve? 1) He bought 100000 shares of Nvidia at a price of $92.52 (net cost here, minus option price of $24.27), while selling a call option with an exercise price of $120 and expiring in 2026. This is a covered call strategy (also translated as' put up call option '). 2) Purchase 100000 NVDA shares at a price of 116.76 per share, with a total cost of 11.676 million. Sell to open 1000 call options, expiring on March 20, 2026, with an exercise price of 120 and a premium of 24.27 per share. One option contract corresponds to 100 shares of stock. 3) The total income from selling options is 24.27 ✕ 1000 ✕ 100=2.427 million. The actual cost price of the combination operation is 116.76-24.27=92.49 per share (ignoring errors and handling fees, the price in Duan Yongping's chart is 92.52 per share). The buyer of the option needs to pay the option premium to the seller (Duan Yongping) and has the right to purchase the underlying asset (100000 shares of Nvidia) at the exercise price (120) on or before the expiration date. 4) After selling the call option, Duan Yongping received a premium, which can enhance returns when the stock price fluctuates little or rises slightly. If the stock price falls below $120 at maturity, the option will not be exercised and he retains the stock and premium. If the stock price exceeds $120, he will sell the stock for $120, but he has already locked in a profit of $27.48 per share (120-92.52). 5) Considering the time factor, the option expires in 2026, which is a relatively long time, so the premium is higher due to the high value of time. Duan Yongping may expect Nvidia's stock price to not significantly exceed $120 within the next year, or even if it does, he is willing to sell for $120 to lock in profits. At the same time, he may be optimistic about Nvidia's mid-term performance, believing that the current price of 116.76 is attractive, and that selling options has reduced the holding cost (as mentioned above, the actual holding cost has decreased to 92.52). 6) If the stock price drops sharply, the premium can partially compensate for the loss, but the stock itself will suffer losses. If there is a significant increase, the return is limited to $120, but it is already higher than the buying price. In a sideways trend, royalties are additional income. This is the essence of his operation like this. In summary, the effect of this combination is to reduce holding costs, obtain option premium income, but at the same time limit upward returns, and the risk of stock price decline is the same as holding only stocks. Suitable for neutral or moderate bullish market expectations, enhancing returns through option returns while setting a target selling price. But there are pros and cons. If Nvidia's stock price skyrockets by more than $120 in the future, Yongping will not receive this portion of the profits. This shows the characteristics of options: 1) Short term trading uses it to bet on short-term fluctuations, while the maximum loss is limited to the premium of the option purchased, without the risk of additional margin. In addition, by combining strategies such as price differentials, potential losses can be flexibly limited, thereby better controlling risks. 2) Long term investors can use options without betting on direction or volatility, but instead take advantage of the unreasonable pricing in the options market to enhance returns, reduce holding costs, and even safely buy good companies at a discount. In the operation, the volatility of the market was taken into account, and potential risks were reduced through option trading to ensure a certain degree of flexibility in the face of market instability. So for both short-term traders and long-term investors, the proper use of options is a good tool to obtain alpha from the market. Options are not just a tool, they can already be considered a way of thinking. In a volatile market, options provide more flexibility and protection, allowing us to maximize returns while controlling risks. 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