Options Trading Strategies

Buy a call option to gain leveraged upside exposure. Risk is limited to the premium paid; profit potential is theoretically unlimited.

Sell a put option to collect premium. Profit when the underlying stays above the strike. Risk is significant if the underlying falls sharply.

Buy a lower-strike call and sell a higher-strike call. Reduces cost versus a long call but caps maximum profit at the short strike.

Sell a higher-strike put and buy a lower-strike put. Collects premium upfront; profitable when the underlying stays above the short strike.

Buy fewer lower-strike calls and sell more higher-strike calls. Can be structured for a net credit or debit; profits from a moderate rise in the underlying.

A directional butterfly that profits when the underlying rises to a specific target price. Lower cost than a simple long call but with a defined, narrow profit zone.

A four-leg bullish structure with a wider profit zone than a bull butterfly. Benefits from the underlying moving into and staying within a target price band.

Buy one lower-strike call and sell two higher-strike calls at different strikes. Reduces net cost and profits from a moderate, controlled upward move.

Buy a put option to gain leveraged downside exposure. Risk is limited to the premium paid; maximum profit is realized at expiration if the underlying falls to zero.

Sell a call option to collect premium. Profitable when the underlying stays below the strike. Carries theoretically unlimited risk if the underlying rises sharply.

Buy a higher-strike put and sell a lower-strike put. Limits cost compared to a long put but caps profit at the short strike.

Sell a lower-strike call and buy a higher-strike call. Collects a net credit; profitable when the underlying stays below the short strike.

Buy fewer higher-strike puts and sell more lower-strike puts. Profits from a moderate decline; can be structured for credit or debit depending on the ratio.

A directional butterfly targeting a specific downside price. Lower cost than a long put but limited to a narrow profit zone around the target strike.

Buy one higher-strike put and sell two lower-strike puts at different strikes. Reduces premium outlay and profits from a controlled moderate decline.

Hold long stock and sell a call against it. Generates income from the premium in flat or mildly rising markets; upside is capped at the short strike.

Hold long stock, sell a call, and buy a protective put. Caps both upside and downside; limits losses while sacrificing gains above the short call strike.

Hold short stock and sell a put. Generates income in flat markets while maintaining a short stock position. Requires experience with short selling.

Sell a call and a put at the same strike and expiration. Maximum profit when the underlying pins at the strike; carries significant directional risk in either direction.

Sell an OTM call and an OTM put with the same expiration. Profitable within a wider range than a straddle but still exposes the trader to large directional moves.

Buy a longer-dated call and sell a shorter-dated call at the same strike. Profits from time decay differential and a flat-to-slightly-rising underlying.

Buy a longer-dated put and sell a shorter-dated put at the same strike. Profits from time decay differential and a flat-to-slightly-falling underlying.

Buy one call at a lower strike and sell two (or more) calls at a higher strike. Profits in flat to mildly rising markets; risk emerges if the underlying surges past the short strikes.

Buy one put at a higher strike and sell two (or more) puts at a lower strike. Profits in flat to mildly falling markets; significant risk if the underlying drops through the short strikes.

Combines a bull spread and a bear spread using three strikes. Maximum profit when the underlying pins at the middle strike; risk is limited to premium paid.

Sell an ATM straddle and buy an OTM strangle for protection. Defined-risk version of the short straddle; benefits from low volatility and minimal price movement.

Combine a bull put spread and a bear call spread to create a wide profit zone. A popular premium-selling strategy benefiting from time decay and range-bound markets.

Similar to a butterfly but using four different strikes, creating a wider but lower-maximum-profit zone. Profits when the underlying stays within the inner strikes at expiration.

Buy a call and a put at the same strike and expiration. Profits from a large move in either direction. Loss is limited to the total premium paid if the underlying stays flat.

Buy an OTM call and an OTM put with the same expiration. Cheaper than a straddle but requires a larger move to reach profitability.

Buy an ITM call and an ITM put with the same expiration. More expensive than a straddle but provides a wider immediate profit zone due to existing intrinsic value.

Buy one call and two puts at the same strike. Profits from a large move in either direction, but with greater weighting toward a downside move.

Buy one OTM call and two OTM puts. Lower cost version of strip straddle; profits from volatility with a bearish tilt.

Buy two calls and one put at the same strike. Profits from large moves but with a bullish tilt — gains are larger if the underlying rises sharply.

Buy two OTM calls and one OTM put. Lower cost version of strap straddle; profits from volatility with a bullish tilt.

Sell fewer lower-strike calls and buy more higher-strike calls. Profits from a large upward move or a sharp decline (via credit received); limited profit in between.

Sell fewer higher-strike puts and buy more lower-strike puts. Profits from a large downward move or an upward move past the short strike; intermediate risk.

The inverse of a long butterfly. Collects a credit and profits when the underlying moves significantly away from the middle strike in either direction.

The inverse of a long condor. Profits from a large move in either direction that takes the underlying outside the inner strike range.

Buy an ATM straddle and sell an OTM strangle as protection. A defined-risk volatility strategy that profits when the underlying makes a large move in either direction.

Buy an OTM strangle and sell a wider OTM strangle for protection. Defined-risk approach to profiting from volatility with a wider required move than the reverse iron butterfly.