Hat trading

Hat trading is a strategy involving the buying and selling of options, which are financial contracts giving the right to buy or sell an asset at a specific price within a certain period. Investors use "hat" strategies—like "covered calls" or "protective puts"—to generate income or hedge against potential losses. For example, selling a call option (writing a "hat") generates premium income, while buying a put (placing a protective hat) provides downside protection. These strategies require understanding market movements and risk management, making them suitable for experienced traders seeking to optimize returns or manage risk efficiently.