How to read these
Every page works the same way. It lists the legs, draws what the position makes or loses at expiry on a made-up $100 stock, and states the best case, the worst case and the break-even. Then it shows which markets it profits in: a stock that falls hard, sits still or rises hard, with volatility falling or rising.
None of them is a recommendation. Which one fits, if any, depends on what you already hold, how much you can lose, and what you think the stock will do, and those are yours to judge.
Two tools sort them. Newer to options? The strategy finder narrows the list to the shapes you are after. Got a market view? The strategy matcher puts numbers on it for every page below.
Income on shares you own
- Covered callShares you hold, with their upside sold for a premium. The fall is still entirely yours.
- Covered strangleA covered call and a cash-secured put on the same stock at once. Two premiums, and a fall that costs twice.
Protecting shares you own
Selling premium
- Cash-secured putPaid now to agree to buy a stock at a lower price later. Gains are capped at the premium and the downside runs to the strike.
- Short strangleTwo premiums for a stock that stays inside a range. A big move either way loses, and upward there is no limit.
- Short straddleThe richest two-option sale there is, earned in full only if the stock ends right at the strike.
- Naked callThe covered call without the shares. A small premium, and a loss that grows with every dollar the stock rises.
- Jade lizardA short put plus a call credit spread. With enough credit, a rally cannot lose; a fall still can.
Defined risk
- Put credit spreadA short put with a floor bought under it. Smaller premium, and the worst case is fixed when it opens.
- Call credit spreadPaid for a stock that stays below a level. A bought call above it puts a ceiling on what a rally can cost.
- Iron condorPaid for a stock that stays inside a range, with the loss capped whichever way it breaks out.
- Iron butterflyThe biggest credit of the four-legged trades, earned only if the stock ends near where it started.
- Long call butterflyA cheap, capped bet that the stock finishes near one price. Built from calls alone.
- Broken-wing butterflyOpened for a credit with no loss if the stock rises, in exchange for a deeper one if it falls.
Buying direction
- Long callThe premium is the most it can lose and the upside has no ceiling, but the rise has to come before expiry.
- Long putGains as the stock falls, whether held as a bet or as insurance on shares you own. The cost is the whole risk.
- Call debit spreadA bet on a rise for less than a call costs alone. Both the cost and the gain are fixed when it opens.
- Put debit spreadA bet on a fall for less than a put costs alone, with the gain stopping at the lower strike.
- Risk reversalA bet on a rise that costs little or nothing to open, because a short put pays for the call.
- Call ratio spreadPays most for a modest rise to the sold strike. The second sold call is uncovered, so a big rally loses without limit.
- Put ratio spreadPays most for a modest fall to the sold strike. The second sold put is uncovered, so a crash loses heavily, down to the stock reaching zero.
Buying movement
- Long straddlePaid up front for a move in either direction. A stock that sits still is the whole loss.
- Long strangleCosts less than a straddle and needs the stock to travel further before either side pays.
Spreads across expiries
- Calendar spreadProfits from the near option decaying faster than the far one, as long as the stock stays near the strike.
- Diagonal spreadA calendar spread with a directional tilt: paid most if the stock rises to the sold strike by the near expiry.
- Poor man's covered callA covered call for much less capital, with a long-dated call standing in for the shares. The trade-offs come with it.
The spreads across expiries are drawn on the day their nearer option expires, with the later one priced at the same volatility, and each says so on its card. Restrike tracks anything you trade, whether or not it has a page here.