🎯 Options Strategy Quick-Reference
Every options strategy from this course — at a glance. Each card shows the setup, max profit, max loss, breakeven, ideal conditions, and a concrete example. Jump to a strategy or scroll through them all.
⚠️ Important Disclaimer
This site is for educational purposes only and does not constitute financial advice. Options trading involves significant risk and is not suitable for all investors. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.
📍 Jump to Strategy
📞 Long Call
Buy a call option when you expect the stock to rise significantly before expiration. Your risk is limited to the premium paid.
- Setup
- Buy 1 call at desired strike price and expiration
- Max Profit
- Unlimited (stock can rise indefinitely)
- Max Loss
- Premium paid (total cost of the option)
- Breakeven
- Strike Price + Premium Paid
- Ideal Conditions
- Expecting a large upward move; low implied volatility when entering (options are cheap)
- Key Greeks
- Delta: positive · Theta: negative (time works against you) · Vega: positive (benefits from rising IV)
💡 Example
Stock XYZ is at $100. You buy a $105 call for $3.00 (cost: $300 for 1 contract).
| Stock at Expiration | Option Value | P/L |
|---|---|---|
| $95 | $0 | −$300 |
| $105 | $0 | −$300 |
| $108 | $300 | $0 (breakeven) |
| $115 | $1,000 | +$700 |
| $120 | $1,500 | +$1,200 |
📉 Long Put
Buy a put option when you expect the stock to decline significantly. A defined-risk alternative to short selling.
- Setup
- Buy 1 put at desired strike price and expiration
- Max Profit
- Strike − Premium (if stock goes to $0)
- Max Loss
- Premium paid
- Breakeven
- Strike Price − Premium Paid
- Ideal Conditions
- Expecting a large downward move; hedging existing long positions; low IV when entering
- Key Greeks
- Delta: negative · Theta: negative · Vega: positive
💡 Example
Stock XYZ is at $100. You buy a $95 put for $2.50 (cost: $250).
| Stock at Expiration | Option Value | P/L |
|---|---|---|
| $105 | $0 | −$250 |
| $95 | $0 | −$250 |
| $92.50 | $250 | $0 (breakeven) |
| $85 | $1,000 | +$750 |
| $80 | $1,500 | +$1,250 |
🏠 Covered Call
Own 100 shares and sell a call against them to generate income. You collect the premium but cap your upside above the strike.
- Setup
- Own 100 shares + Sell 1 call (OTM or ATM)
- Max Profit
- Premium + (Strike − Stock Cost)
- Max Loss
- Stock Cost − Premium (stock → $0)
- Breakeven
- Stock Cost − Premium Received
- Ideal Conditions
- Sideways to slightly bullish outlook; wanting income from shares you already own; high IV (bigger premiums)
- Key Greeks
- Net delta: reduced positive · Net theta: positive (time decay works for you)
💡 Example
You own 100 shares of XYZ at $100. You sell a $110 call for $2.00 (receive $200).
| Stock at Expiration | Stock P/L | Option P/L | Total P/L |
|---|---|---|---|
| $90 | −$1,000 | +$200 | −$800 |
| $98 | −$200 | +$200 | $0 |
| $105 | +$500 | +$200 | +$700 |
| $110 | +$1,000 | +$200 | +$1,200 (max) |
| $120 | +$1,000* | −$800 | +$1,200 (capped) |
*Shares called away at $110, so stock gain stops there.
🛡️ Protective Put
Buy a put on stock you own as insurance against a decline. Keeps unlimited upside while defining your maximum loss.
- Setup
- Own 100 shares + Buy 1 put (typically OTM)
- Max Profit
- Unlimited (above breakeven)
- Max Loss
- Stock Cost − Put Strike + Premium Paid
- Breakeven
- Stock Cost + Premium Paid
- Ideal Conditions
- Long-term bullish but worried about a short-term drop; before earnings or uncertain events; portfolio insurance
- Key Greeks
- Net delta: reduced positive · Net theta: negative (paying for insurance over time)
💡 Example
You own 100 shares of XYZ at $100. You buy a $90 put for $2.00 (cost: $200).
Max loss = ($100 − $90) + $2 = $12/share = $1,200. No matter how far the stock falls, you can sell at $90.
🔒 Collar
Combines a covered call and a protective put. Limits both upside and downside — sometimes at zero net cost (costless collar).
- Setup
- Own 100 shares + Buy 1 OTM put + Sell 1 OTM call
- Max Profit
- Call Strike − Stock Cost + Net Credit (or − Net Debit)
- Max Loss
- Stock Cost − Put Strike + Net Debit (or − Net Credit)
- Breakeven
- Stock Cost + Net Debit (or − Net Credit)
- Ideal Conditions
- Want to protect gains on stock you own while minimizing the cost of protection; willing to cap upside
- Costless Collar
- When the call premium received equals the put premium paid. Zero net cost but tight profit range.
💵 Cash-Secured Put
Sell a put while keeping enough cash to buy the stock if assigned. Collect premium while waiting to buy a stock at a lower price.
- Setup
- Sell 1 put + Hold cash = Strike × 100 in account
- Max Profit
- Premium received
- Max Loss
- (Strike − Premium) × 100 (stock → $0)
- Breakeven
- Strike − Premium Received
- Ideal Conditions
- You'd be happy to own the stock at the strike price; want to generate income while waiting; high IV = bigger premiums
- Key Greeks
- Delta: positive (short put) · Theta: positive (time decay works for you)
💡 Example
XYZ is at $100. You sell a $95 put for $2.00 (receive $200). You hold $9,500 in cash.
If XYZ stays above $95: keep the $200 premium. If XYZ drops below $95: you buy 100 shares at $95, but your effective cost basis is $93 ($95 − $2 premium).
📈 Bull Call Spread
A defined-risk, defined-reward vertical spread. Cheaper than a straight long call because you sell a higher-strike call to offset cost.
- Setup
- Buy 1 call (lower strike) + Sell 1 call (higher strike), same expiration
- Max Profit
- (High Strike − Low Strike) − Net Debit
- Max Loss
- Net debit paid
- Breakeven
- Long Strike + Net Debit
- Ideal Conditions
- Moderately bullish — expecting the stock to reach the short strike but not much higher; want to reduce cost vs. a naked long call
- Key Greeks
- Net delta: positive (but lower than long call alone) · Net theta: depends on position relative to strikes
💡 Example
XYZ at $100. Buy $100 call for $5, sell $110 call for $2. Net debit: $3.00 ($300).
| Stock at Expiration | Spread Value | P/L |
|---|---|---|
| $100 or below | $0 | −$300 (max loss) |
| $103 | $300 | $0 (breakeven) |
| $107 | $700 | +$400 |
| $110+ | $1,000 | +$700 (max profit) |
📉 Bear Put Spread
A defined-risk bearish vertical spread. Buy a higher-strike put and sell a lower-strike put to reduce cost.
- Setup
- Buy 1 put (higher strike) + Sell 1 put (lower strike), same expiration
- Max Profit
- (High Strike − Low Strike) − Net Debit
- Max Loss
- Net debit paid
- Breakeven
- Long Strike − Net Debit
- Ideal Conditions
- Moderately bearish — expecting the stock to fall to the short strike; want cheaper entry than a naked long put
💡 Example
XYZ at $100. Buy $100 put for $5, sell $90 put for $2. Net debit: $3.00 ($300).
Max profit: $700 (if stock ≤ $90). Max loss: $300 (if stock ≥ $100). Breakeven: $97.
🦅 Iron Condor
A four-leg strategy that profits when the stock stays within a range. Combines a bull put spread and a bear call spread. Defined risk on both sides.
- Setup
- Sell 1 OTM put + Buy 1 further OTM put (lower) + Sell 1 OTM call + Buy 1 further OTM call (higher)
- Max Profit
- Net credit received (all 4 options expire worthless)
- Max Loss
- Width of wider spread − Net Credit
- Breakeven
- Upper: Short call strike + Net credit
Lower: Short put strike − Net credit - Ideal Conditions
- Expecting low volatility; stock staying in a range; high IV when entering (options are expensive = bigger credit)
- Key Greeks
- Net delta: near zero · Net theta: positive · Net vega: negative
💡 Example
XYZ at $100. Sell $95 put / Buy $90 put / Sell $105 call / Buy $110 call. Net credit: $1.50 ($150).
Profit zone: $93.50 to $106.50. Max profit: $150. Max loss: $350 ($5 width − $1.50 credit = $3.50 × 100).
🎯 Short Strangle
Sell both an OTM call and an OTM put. Higher premium than an iron condor but undefined risk — requires careful management.
- Setup
- Sell 1 OTM call + Sell 1 OTM put (no protective wings)
- Max Profit
- Net credit received
- Max Loss
- Unlimited (on the upside); Substantial (on the downside, to $0)
- Breakeven
- Upper: Call strike + Net credit
Lower: Put strike − Net credit - Ideal Conditions
- High IV environment (options overpriced); confident the stock will stay range-bound; larger account to handle margin
- Risk Note
- ⚠️ Undefined risk means a large unexpected move can cause significant losses. Always have an exit plan and manage at 50% of max profit or 2× credit received as a stop.
🎡 The Wheel Strategy
A systematic income strategy that cycles between selling cash-secured puts and covered calls on the same stock. Generate premium income whether you own the shares or not.
- The Cycle
-
Phase 1: Sell cash-secured puts → collect premium
If assigned: You now own 100 shares at a reduced cost basis
Phase 2: Sell covered calls on your shares → collect more premium
If called away: Shares sold at strike + premium. Return to Phase 1. - Best Underlying Stocks
- Stocks you'd be happy to own long-term; stable companies with decent premiums; liquid options markets; moderate volatility
- Capital Required
- Enough cash to buy 100 shares at the put strike (e.g., $95 strike = $9,500 cash needed)
- Income Sources
- Put premiums + Call premiums + Dividends (while holding shares) + Capital appreciation
📅 LEAPS (Long-Term Options)
Options with expirations 1+ years out. Deep ITM LEAPS calls can act as a stock replacement with built-in leverage at a fraction of the cost of owning shares outright.
- Setup (Stock Replacement)
- Buy 1 deep ITM LEAPS call (delta ≥ 0.80) with 1+ year to expiration
- Max Profit
- Unlimited (acts like owning stock but at a discount)
- Max Loss
- Premium paid (still limited, unlike owning stock)
- Why Deep ITM?
- High delta means the LEAPS moves nearly 1:1 with the stock. Minimal extrinsic value means less lost to time decay.
- Ideal Conditions
- Long-term bullish conviction; want leverage with defined risk; can't afford or don't want to tie up capital for 100 shares
- Key Consideration
- LEAPS held > 1 year may qualify for long-term capital gains tax rates. No dividends received (unlike owning shares).
💡 Example
XYZ at $150. Instead of spending $15,000 for 100 shares, buy a $100 strike LEAPS call expiring in 18 months for $55 ($5,500).
Delta ≈ 0.85. If XYZ rises $10, your LEAPS gains ≈ $8.50/share ($850). You control 100 shares for ~37% of the cost.
⚖️ Strategy Comparison Matrix
| Strategy | Outlook | Risk | Reward | Capital Needed | Complexity |
|---|---|---|---|---|---|
| Long Call | Bullish | Limited | Unlimited | Low | Low |
| Long Put | Bearish | Limited | High | Low | Low |
| Covered Call | Neutral+ | Substantial | Limited | High | Medium |
| Protective Put | Bullish | Limited | Unlimited | High | Medium |
| Collar | Neutral | Limited | Limited | High | Medium |
| Cash-Secured Put | Neutral+ | Substantial | Limited | High | Medium |
| Bull Call Spread | Mod. Bullish | Limited | Limited | Low | High |
| Bear Put Spread | Mod. Bearish | Limited | Limited | Low | High |
| Iron Condor | Neutral | Limited | Limited | Medium | High |
| Short Strangle | Neutral | Unlimited | Limited | High | High |
| Wheel | Neutral+ | Substantial | Limited | High | High |
| LEAPS | Bullish | Limited | Unlimited | Medium | Medium |
📚 Related Resources
- Glossary — Full A-Z definitions of all investing and options terms
- Cheat Sheet — Key formulas, rules of thumb, and quick-reference tables
- Course Home — Back to the full lesson list