Strategy | Execution | Benefits | Disadvantages | Component Parts | Risk Profile |
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Long Call | Buy a call. | Capped risk; uncapped reward; better leverage than stock purchase. | Can lose entire stake if the call expires OTM (out of the money). |  |  |
Long Put | Buy a put. | Capped risk; uncapped reward; better leverage than straight stockshorting. | Can lose entire stake if the put expires OTM (out of the money). |  |  |
Short Call (naked) | Sell a call. | Short-term income strategy. | Uncapped risk and capped reward. |  |  |
Short Put (naked) | Sell a put. | Short-term income strategy. | Uncapped risk and capped reward. |  |  |
Covered Call | Buy stock and sell call. | Protected income strategy. Profit assured if stock remains static or rises. Calls can be sold on a monthly basis to generate income. | Uncapped risk and capped reward. |  |  |
Collar | Buy stock, buy ATM put, and sell OTM call. | Can be a riskless strategy if executed correctly with the right stock. | Net debit out of your account. Works best for long-term trades where you leave it alone. |  |  |
Covered Put | Sell stock (short) and sell put. | Net credit into your account. | Uncapped risk and capped reward. |  |  |
Synthetic Call | Buy stock and buy put. | Capped risk and uncapped reward. Good insurance tactic. | Expensive strategy. |  |  |
Synthetic Put | Short stock and buy call. | Capped risk and uncapped reward. | More complex than simply buying puts. |  |  |
Covered Short Straddle | Buy stock and sell lower strike put and higher strike call with same expiration date. | Enhanced income (compared with Covered Call). | Very high risk and capped reward. Not recommended. |  |  |
Covered Short Strangle | Buy stock and sell put and call with same strike and expiration date. | Enhanced income (compared with Covered Call). | Very high risk and capped reward. Not recommended. |  |  |
Bull Call Spread | Buy lower strike calls and sell higher strike calls (same expiration). | Capped risk; lower breakeven point than simply buying a call. | Capped reward. |  |  |
Bull Put Spread | Buy lower strike puts and sell higher strike puts (same expiration). | Capped risk; lower breakeven point than simply buying a put; net credit into your account. | Capped reward. |  |  |
Bear Call Spread | Sell lower strike calls and buy higher strike calls (same expiration). | Capped risk; bearish income strategy. | Capped reward. |  |  |
Bear Put Spread | Sell lower strike puts and buy higher strike puts (same expiration). | Capped risk. | Capped reward. |  |  |
Bear Call Ladder | Buy lower strike calls, sell higher strike calls, and sell even higher strike calls (all same expiration). | Cheap strategy. | Uncapped risk if stock rises sharply; confusing as to whether this is a bullish or bearish strategy. |  |  |
Bull Put Ladder | Buy lower strike puts, buy higher strike puts, and sell even higher strike puts (all same expiration). | Uncapped reward as the stock falls. | Expensive; confusing as to whether this is a bullish or bearish strategy. |  |  |
Bull Call Ladder | Sell lower strike calls, buy higher strike calls, and buy even higher strike calls (all same expiration). | Uncapped reward as the stock rises. | Expensive; confusing as to whether this is a bullish or bearish strategy. |  |  |
Bear Put Ladder | Sell lower strike puts, sell higher strike puts, and buy even higher strike puts (all same expiration). | Cheap strategy. | Uncapped risk as the stock falls; confusing as to whether this is a bullish or bearish strategy. |  |  |
Straddle | Buy puts and calls with same strike price and expiration. | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Expensive; low volatility required for entry whereas high volatility required once you are in. |  |  |
Short Straddle | Sell puts and calls with same strike and expiration. | Net credit into your account; profitable if stock shows low volatility and does not move. | Uncapped risk on either side. |  |  |
Strangle | Buy lower strike puts and buy higher strike calls (same expiration). | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Low volatility required for entry whereas high volatility required once you are in. |  |  |
Short Strangle | Sell lower strike puts and sell higher strike calls (same expiration). | Net credit into your account; profitable if stock shows low volatility and does not move. | Uncapped risk on either side. |  |  |
Strip | Buy two puts and one call with same strike and expiration. | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Expensive; low volatility required for entry whereas high volatility required once you are in. |  |  |
Strap | Buy one put and two calls with same strike and expiration. | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Expensive; low volatility required for entry whereas high volatility required once you are in. |  |  |
Long Call Butterfly | Buy one lower strike call, sell two middle strike calls, and buy one higher strike call. All strikes evenly apart. | Capped risk and a cheap strategy to enter; can be very profitable if stock shows low volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Long Put Butterfly | Buy one lower strike put, sell two middle strike puts, and buy one higher strike put. All strikes evenly apart. | Capped risk and a cheap strategy to enter; can be very profitable if stock shows low volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Short Call Butterfly | Sell one lower strike call, buy two middle strike calls, and sell one higher strike call. All strikes evenly apart. | Capped risk; profitable if stock shows high volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Short Put Butterfly | Sell one lower strike put, buy two middle strike puts, and sell one higher strike put. All strikes evenly apart. | Capped risk; profitable if stock shows high volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Modified Call Butterfly | Buy one lower strike put, sell two middle strike puts, and buy one higher strike put. Middle strike closer to higher strike than to lower strike. | Capped risk and a cheap strategy to enter; can be very profitable if stock shows low volatility or rises modestly after you are in. | Capped reward; awkward to adjust. |  |  |
Modified Put Butterfly | Buy one lower strike call, sell two middle strike calls, and buy one higher strike call. Middle strike closer to higher strike than to lower strike. | Capped risk and a cheap strategy to enter; can be very profitable if stock shows low volatility or rises modestly after you are in. | Capped reward; awkward to adjust. |  |  |
Call Ratio Backspread | Sell one or two lower strike calls and buy two or three higher strike calls. Buy greater number of higher strike calls in ratio of 0.67 or less. | Capped risk; uncapped and highly geared reward if stock rises significantly. | Lots of volatility required after entry and in the right direction (upwards) for your trade to be profitable. |  |  |
Put Ratio Backspread | Buy two or three lower strike puts and sell one or two higher strike puts. Buy greater number of lower strike puts in ratio of 0.67 or less. | Capped risk; uncapped and highly geared reward if stock falls significantly. | Lots of volatility required after entry and in the right direction (downwards) for your trade to be profitable. |  |  |
Ratio Call Spread | Buy lower strike call and sell greater number of higher strike calls (ratio of 0.67 or less). | | Uncapped risk; capped reward. |  |  |
Ratio Put Spread | Buy higher strike put and sell greater number of lower strike puts (ratio of 0.67 or less). | | Uncapped risk; capped reward. |  |  |
Long Call Condor | Buy lower strike call, sell middle strike call, sell next middle strike call, and buy higher strike call. All strikes evenly apart. | Capped risk and a cheap strategy to enter; can be very profitable if stock remains rangebound after you are in. | Capped reward; awkward to adjust. |  |  |
Long Put Condor | Buy lower strike put, sell middle strike put, sell next middle strike put, and buy higher strike put. All strikes evenly apart. | Capped risk and a cheap strategy to enter; can be very profitable if stock remains rangebound after you are in. | Capped reward; awkward to adjust. |  |  |
Short Call Condor | Sell lower strike call, buy middle strike call, buy next middle strike call, and sell higher strike call. All strikes evenly apart. | Capped risk; profitable if stock shows high volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Short Put Condor | Sell lower strike put, buy middle strike put, buy next middle strike put, and sell higher strike put. All strikes evenly apart. | Capped risk; profitable if stock shows high volatility after you are in. | Capped reward; awkward to adjust. |  |  |
Long Call Synthetic Straddle | Sell one stock and buy two ATM calls. | Capped risk; profitable if stock rises or falls significantly; uncapped reward; cheaper than doing a normal Straddle. | Low volatility required for entry whereas high volatility required once you are in. |  |  |
Long Put Synthetic Straddle | Buy one stock and two ATM puts. | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Even more expensive than normal Straddle; low volatility required for entry, whereas high volatility required once you are in. |  |  |
Short Call Synthetic Straddle | Buy one stock and sell two ATM calls. | Profitable if stock shows low volatility and does not move. | Uncapped risk on either side; expensive because you are buying the stock. |  |  |
Short Put Synthetic Straddle | Sell one stock and two ATM puts. | Cheap strategy that brings in a net credit to your account; profitable if stock shows low volatility and does not move. | Uncapped risk on either side; large margin required. |  |  |
Long Iron Butterfly | Buy lower strike put, sell mid strike put, sell next mid strike call, and buy higher strike call. (Middle strikes can be the same.) | Cheap strategy that brings in a net credit to your account; capped risk; profitable if stock doesn't move much; capped risk. | Capped reward; margin required. |  |  |
Short Iron Butterfly | Sell lower strike put, buy mid strike put, buy next mid strike call, and sell higher strike call. (Middle strikes can be the same.) | Capped risk. | Expensive strategy. |  |  |
Calendar Call | Buy long-term call and sell shorter- term call (same strikes). | Capped risk; can sell the shorter-term calls on a monthly basis in order to generate income. | Capped reward; can become loss-making if the underlying asset rises too much. |  |  |
Calendar Put | Buy long-term put and sell shorter-term put (same strikes). | Capped risk; can sell the shorter-term calls on a monthly basis in order to generate income. | Capped reward; can become loss-making if the underlying asset rises too much. |  |  |
Diagonal Call | Buy long-term lower strike call and sell shorter-term higher strike call. | Capped risk; can sell the shorter-term calls on a monthly basis in order to generate income. | Capped reward. |  |  |
Diagonal Put | Sell shorter-term lower strike put and buy longer-term higher strike put. | Capped risk; can sell the shorter-term calls on a monthly basis in order to generate income. | Capped reward. |  |  |
Guts | Buy lower strike calls and higher strike puts. | Capped risk; profitable if stocks rises or falls significantly; uncapped reward. | Expensive because you're buying ITM options. |  |  |
Short Guts | Sell lower strike calls and higher strike puts. | Net credit into your account; profitable if stock shows low volatility and does not move. | Uncapped risk on either side. |  |  |
Long Synthetic Future | Buy ATM call and sell ATM put. | Simulates going short on a stock with no or very little net debit or credit. | Same leverage as the underlying. |  |  |
Short Synthetic Future | Sell ATM call and buy ATM put. | Simulates going long on a stock with no or very little net debit or credit. | Same leverage as the underlying. |  |  |
Long Combo | Sell OTM (lower) put and buy OTM (higher) call. | Almost simulates going long on a stock with no or very little net debit or credit. | Same leverage as the underlying. |  |  |
Short Combo | Buy OTM (lower) put and sell OTM (higher) call. | Almost simulates going short on a stock with no or very little net debit or credit. | Same leverage as the underlying. |  |  |
Long Box | Buy one low strike call, sell one same strike put; sell one higher strike call, and buy one same higher strike put; all same expiration dates. | Create a completely hedged position where the ultimate profit is known with certainty ahead of time. | Complicated, requires many contracts to be effective. Bid/Ask spread makes it difficult to guarantee a profitable position. |  |  |