Glossary topic
Options Strategies
30 terms
Why this topic matters
An options strategy combines contract rights and obligations into a payoff shape. Verticals trade capped reward for defined risk, straddles and strangles buy movement in either direction, and covered or cash-secured structures pair premium income with stock exposure.
Start with the thesis, then choose the structure. Compare maximum loss, maximum profit, breakevens, assignment paths, volatility exposure, and the required move. The options calculator brings every leg into one position so the full trade is clear before entry.
Topic questions
Options Strategies FAQ
B
7 termsBear Call Spread
A bear call spread is a defined-risk options strategy that sells a lower-strike call and buys a higher-strike call in the same expiration for a net credit.
Bear Put Spread
A bear put spread is a defined-risk bearish options strategy that buys a higher-strike put and sells a lower-strike put in the same expiration for a net debit.
Box Spread
A box spread is a four-leg options position with a fixed value at expiration, used to lend or borrow cash at an implied interest rate.
Broken Wing Butterfly
A broken wing butterfly is a 1:2:1 options spread with unequal wing widths, giving an expiration profit peak at the body strike and a different risk on each side.
Bull Call Spread
A bull call spread is a debit options strategy that buys a lower-strike call and sells a higher-strike call in the same expiration, capping both cost and profit.
Bull Put Spread
A bull put spread is a defined-risk options strategy that sells a higher-strike put and buys a lower-strike put in the same expiration for a net credit.
Butterfly Spread
A butterfly spread is a three-strike options strategy in a 1:2:1 ratio that creates a defined-risk payoff peaking at the middle strike at expiration.
C
6 termsCalendar Spread
A calendar spread is an options strategy that sells a near-term option and buys a longer-dated option of the same type and strike to trade the value of time.
Cash-Secured Put
A cash-secured put is an options strategy that sells a put while reserving enough cash to buy 100 shares at the strike price if the put is assigned.
Collar Strategy
A collar strategy is a stock hedge that buys a protective put and sells a covered call against owned shares, setting a floor and a cap through one expiration.
Covered Call
A covered call is an options strategy that sells one call against 100 owned shares, collecting premium in exchange for capping the shares’ upside at the strike.
Covered Put
A covered put is an options strategy that sells a put against a matching short-stock position, collecting premium and capping profit below the put strike.
Credit Spread
A credit spread is an options strategy that sells one option and buys a cheaper one of the same type and expiration, collecting a net premium with a capped loss.
D
2 termsDebit Spread
A debit spread is an options strategy that buys one option and sells a cheaper one of the same type and expiration for a net premium, capping risk and profit.
Diagonal Spread
A diagonal spread is an options strategy that pairs two calls or two puts with different strikes and expirations, blending vertical and calendar spread exposures.
I
2 termsIron Butterfly
An iron butterfly is a defined-risk options strategy that sells a call and a put at one strike and buys wings on both sides, earning its full credit there at expiration.
Iron Condor
An iron condor is a defined-risk options strategy that sells an out-of-the-money put spread and call spread in one expiration and profits if the stock stays in a range.
J
1 termP
2 termsPoor Man’s Covered Call
A poor man’s covered call is a long call diagonal spread that sells a short-dated call against a longer-dated, lower-strike call instead of 100 shares.
Protective Put
A protective put is an options strategy that pairs owned shares with a long put, setting a minimum sale price for the shares while keeping their upside.
R
3 termsRatio Backspread
A ratio backspread is an options strategy that buys more options than it sells, profiting from a large move one way, with its maximum expiration loss at the long strike.
Ratio Spread
A ratio spread is an options strategy that buys and sells unequal quantities of one option type at different strikes, such as one long call against two short calls.
Risk Reversal
A risk reversal is an options strategy that buys one option and sells an option of the opposite type in the same expiration, usually with both out of the money.
S
4 termsStraddle
A straddle is an options strategy that buys or sells a call and a put at the same strike and expiration, trading the size of a move rather than its direction.
Strangle
A strangle is an options strategy that buys or sells a higher-strike call and a lower-strike put in the same expiration, usually with both out of the money.
Synthetic Long Stock
Synthetic long stock is an options position that buys a call and sells a put at the same strike and expiration to reproduce the payoff of owning 100 shares.
Synthetic Short Stock
Synthetic short stock is an options position that sells a call and buys a put at the same strike and expiration to reproduce the payoff of a short sale.