Strategy Guide
Explore core option trading strategies in depth
Bear Call Spread
Selling a lower-strike Call and buying a higher-strike Call.
Bear Put Spread
Buying a higher-strike Put and selling a lower-strike Put.
Broken Wing Butterfly
A butterfly spread variant where one wing is further than the other to eliminate risk in one direction.
Bull Call Spread
Buying a lower-strike Call and selling a higher-strike Call.
Bull Put Spread
Selling a higher-strike Put and buying a lower-strike Put.
Butterfly Spread
Buying one low strike, selling two middle strikes, and buying one high strike.
Call Backspread
Selling few ATM Calls and buying more OTM Calls.
Call Ratio Spread
Buying few ATM Calls and selling more OTM Calls.
Cash-Secured Put
Selling an OTM Put option while maintaining enough cash to buy the stock.
Christmas Tree Spread
Buying one option, skipping a strike, selling two, skipping another, and buying one.
Collar
Holding stock, buying a Put for protection, and selling a Call to offset cost.
Covered Call
Holding the underlying stock while selling an equivalent number of Call options.
Diagonal Spread
Buying a long-term option and selling a near-term option with a different strike.
Double Calendar Spread
Simultaneously establishing a Call calendar and a Put calendar.
Double Diagonal Spread
Simultaneously establishing a Call diagonal and a Put diagonal.
Iron Butterfly
Selling an ATM Straddle and buying an OTM Strangle for protection.
Iron Condor
A four-leg strategy consisting of a Put Spread and a Call Spread.
Jade Lizard
Selling an OTM Put and an OTM Bear Call Spread.
Long Call
Buying a Call option, expecting a significant price increase.
Long Call Calendar Spread
Selling a near-term Call and buying a long-term Call.
Long Put
Buying a Put option, expecting a significant price decrease.
Long Put Calendar Spread
Selling a near-term Put and buying a long-term Put.
Long Straddle
Buying both a Call and a Put at the same strike price.
Long Strangle
Buying both an OTM Call and an OTM Put.
Protective Put
Holding the stock while buying a Put option.
Put Backspread
Selling few ATM Puts and buying more OTM Puts.
Put Ratio Spread
Buying few ATM Puts and selling more OTM Puts.
Ratio Spread
Buying X options and selling more (Y > X) options.
Risk Reversal
Selling an OTM Put and buying an OTM Call.
Seagull Spread
A strategy consisting of a bull spread and a short put (or vice versa).
Short Call
Selling a Call option, expecting the price not to rise.
Short Put
Selling a Put option, expecting the price not to fall.
Short Straddle
Selling both a Call and a Put at the same strike price.
Short Strangle
Selling both an OTM Call and an OTM Put.
Synthetic Long Stock
Buying an ATM Call and selling an ATM Put.
Synthetic Short Stock
Selling an ATM Call and buying an ATM Put.
Zebra (Zero Extrinsic Back Ratio)
Buying two deep ITM options and selling one ATM option to zero out extrinsic value.