Options strategy guides

A long call is the simplest bullish options strategy: you buy a call option to profit from a rise in the underlying above the strike price, with risk limited to the premium paid.

A long put is a bearish strategy where you buy a put option to profit from a decline in the underlying below the strike, with risk capped at the premium paid.

A short (naked) call collects premium by selling a call option, profiting when the underlying stays below the strike. Uncovered short calls carry theoretically unlimited risk.

A short put collects premium by selling a put option, profiting when the underlying stays above the strike. It is often used to acquire stock at a discount.

A bull call spread buys a lower-strike call and sells a higher-strike call, creating a defined-risk, defined-reward bullish position at a lower cost than a long call.

A bear put spread buys a higher-strike put and sells a lower-strike put, giving defined-risk bearish exposure at a reduced cost versus a long put.

A bear call spread sells a lower-strike call and buys a higher-strike call, collecting a net credit that is kept if the underlying stays below the short strike.

A bull put spread sells a higher-strike put and buys a lower-strike put, collecting a net credit kept if the underlying stays above the short strike.

A short straddle sells a call and a put at the same strike, profiting when the underlying stays near the strike and implied volatility falls. Risk is large in both directions.

A short strangle sells an out-of-the-money put and call, collecting premium over a wider profit range than a straddle in exchange for a smaller credit and large tail risk.

A long straddle buys a call and a put at the same strike, profiting from a large move in either direction. The combined premiums paid are the maximum loss.

A long strangle buys an out-of-the-money put and call, costing less than a straddle but requiring a larger move to become profitable.

An iron butterfly sells an at-the-money straddle and buys protective wings, earning a limited credit when the underlying finishes near the center strike, with defined risk.

An iron condor sells an out-of-the-money put spread and call spread, targeting a range-bound expiration with defined, limited profit and loss.