Attention: New Traders.
Using options while trading can be very profitable. Let us say that you have never used option till now and you want to buy a stock say Tata Power or far that matter any other stock, which has options also. You have done your homework, be it fundamental analysis of technical analysis. The stock is sitting at you entry point, and you are ready to pull the trigger and buy the stock.
Now consider that instead of pulling the trigger and buying the stock, you sell a put for the same stock and collect premium. (Usually it is done two strikes below the CMP.)
If stock goes down and the put is in the money on expiry date than you will own the stock, which in any case you wanted to buy, but at a far lower price. It is like buying stock on 10% Sale.
I leave the rest for the imagination on part of New Traders.
Good Luck.
Wastej