Options Strategies

Long-form explainers for the most common options strategies. Each page covers the structure’s payoff at expiration, break-even math, max profit and max loss, when to use the trade, and the most common pitfalls. Pair with the strategy builder to apply any structure to a live ticker.

Long Call: Pay premium for the right to buy 100 shares at the strike. Leveraged upside, capped downside at the premium paid.
Long Put: Pay premium for the right to sell 100 shares at the strike. Leveraged downside exposure, capped loss at the premium paid.
Covered Call: Hold 100 shares and sell a call against them. Collect premium; upside capped above the strike.
Cash-Secured Put: Sell a put and hold cash to cover assignment. Collect premium; if assigned, you buy shares at an effective discount.
Iron Condor: Sell an OTM call spread and an OTM put spread. Profits if the underlying stays between the short strikes.
Bull Call Spread: Buy a closer-to-money call and sell a further-OTM call. Cheaper than a long call; upside capped at the short strike.
Bear Put Spread: Buy a closer-to-money put and sell a further-OTM put. Cheaper than a long put; downside profit capped at the short strike.
Long Straddle: Buy an ATM call and ATM put at the same strike and expiration. Profits from a large move in either direction.
Long Strangle: Buy an OTM call and an OTM put at different strikes. Cheaper than a straddle; requires a larger move to profit.
Calendar Spread: Sell a near-expiration option and buy a far-expiration option at the same strike. Profits from term-structure mean reversion.
Long Butterfly: Buy a lower-strike and upper-strike call and sell two at the middle strike. Max profit at the middle strike; defined risk.
Collar: Hold long stock, buy a protective put, sell a covered call. Caps both upside and downside; often near zero-cost.