Options Learning Center

Bullish | Unlimited Profit | Limited Loss

The long call option strategy involves the outright purchase of a call option, where the goal is to profit from an appreciation in the price of the underlying security.

Risk is limited to the premium paid (Net Debit) for 100 shares of the long call option, while maximum profit is unlimited, as the price of the security can theoretically rise indefinitely.

Bearish | Limited Profit | Limited Loss

The long put or protective put option strategy involves the outright purchase of a put option, where the goal is to profit from depreciation in the price of the underlying security.

Risk is limited to the premium paid (Net Debit) for 100 shares of the long put option, while maximum profit is the difference between the strike price and the price of the put, which is achieved in the unlikely event the security goes to zero.

Bullish | Limited Profit

A covered call is a neutral to slightly bullish option strategy where you expect the underlying security to increase in value. The covered call option strategy is used to generate income, where you cover the option position by owning the underlying security.

A covered call involves selling a call option at a strike price above or around the underlying price to collect a premium. The opportunity loss of a covered call would be if the security price increased significantly above the strike price, as your gains are capped.

Profit is limited to the premium received for the short call plus the difference between the strike value and security price. Risk is the depreciation in the price of the underlying security. Maximum profit is achieved if the security price increases to the strike price at expiration.

Bullish | Limited Profit

A naked put or short put income-generation option strategy is used to capture option premiums by selling put options where you expect the underlying security to remain stable or increase in value.

The naked put option strategy is used to generate income on a security you may not own but could be forced to buy.

Profit is limited to the premium received (Net Credit) for 100 shares of the short put option. Risk is the depreciation in the price of the underlying security, and loss is the difference between the strike price and the current price of the underlying security minus the premium received. Maximum profit is achieved if the security price is at or above the strike price at expiration.

Protective | Unlimited Profit | Limited Loss

The married put strategy provides downside protection while still being able to profit from an appreciation in the price of the underlying security.

The married put option strategy involves purchasing underlying shares and simultaneously purchasing an equivalent number of put options. The cost of the shares and the premium paid for the long put(s) together are the Net Debit. The maximum loss is the difference between the Net Debit and the strike price of the put.

The married put strategy succeeds if the underlying security rises by the cost of the put option(s). The maximum profit is unlimited, as a security can theoretically rise indefinitely.

Protective | Limited Profit | Limited Loss

The collar option strategy is a risk protection strategy that provides downside protection, but also limits upside profit potential.

A collar position is a hedge strategy created when owning underlying shares and simultaneously selling a call (covered) and buying a put (protective). Call options are typically sold above the price, and put options are typically bought below the price.

Depending on market conditions, the collar strategy can be established for either a debit or a credit. The opportunity loss of a collar position would be if the security price increased significantly above the strike price, as your gains are capped. Maximum loss will occur if the underlying security is at or below the lower strike price at expiration. Maximum profit is achieved if the underlying asset is at or above the higher strike price at expiration.

Bullish | Limited Profit | Limited Loss

The bull call spread is a long call option strategy where you expect the underlying security to increase in value. The bull call option strategy involves buying a call option and selling a call option at a higher strike price.

Maximum loss is the difference between the premium paid for the long call and the premium received for the short call (Net Debit), which will occur if the underlying security price is below the lower strike price at expiration. Maximum profit is the difference in strike values minus the Net Debit.

The bull call strategy succeeds if the security price is above breakeven (lower strike + Net Debit). Maximum profit is achieved if the security price is above the higher strike price at expiration.

Bearish | Limited Profit | Limited Loss

The bear call spread is a short call option strategy where you expect the underlying security to decrease in value. The bear call option strategy involves selling a call option and buying a call option at a higher strike price.

Maximum profit is the difference between the premium received for the short call and the premium paid for the long call (Net Credit). Maximum loss is limited to the difference in strike values minus the Net Credit, which will occur if the underlying security price is above the higher strike price at expiration.

The bear call strategy succeeds if the security price is below breakeven (lower strike + Net Credit). Maximum profit is achieved if the security price is below the lower strike price at expiration.

Bearish | Limited Profit | Limited Loss

The bear put spread is a long put option strategy where you expect the underlying security to decrease in value. The bear put option strategy involves buying a put option and selling a put option at a lower strike price.

Maximum loss is the difference between the premium paid for the long put and the premium received for the short put (Net Debit), which will occur if the underlying security price is above the higher strike price at expiration. Maximum profit is the difference in strike values minus the Net Debit.

The bear put strategy succeeds if the security price is below breakeven (higher strike - Net Debit). Maximum profit is achieved if the security price is below the lower strike price at expiration.

Bullish | Limited Profit | Limited Loss

The bull put spread is a short put option strategy where you expect the underlying security to increase in value. The bull put option strategy involves selling a put option and buying a put option at a lower strike price.

Maximum profit is the difference between the premium received for the short put and the premium paid for the long put (Net Credit). The maximum loss is the difference in strike values minus the Net Credit, which will occur if the underlying security price is below the lower strike price at expiration.

The bull put strategy succeeds if the security price is above breakeven (higher strike - Net Credit). Maximum profit is achieved if the security price is above the higher strike price at expiration.

Long Call Calendar Option Screener

Neutral | Limited Profit | Limited Loss

The long call calendar is a long call option spread strategy where you expect the underlying security to trade within a specific price range. The long call calendar option strategy involves selling a nearer-term expiration call and buying a longer-term expiration call at the same strike price.

The maximum loss is the difference between the premium paid for the long call and the premium received for the short call (Net Debit).

The long call calendar strategy achieves maximum profit if the security price is equal to the strike price at the expiration of the nearer-term short call, at which point profit will be equal to the value of the long call.

More information coming soon.

Long Put Calendar Option Screener

Neutral | Limited Profit | Limited Loss

The long put calendar is a long put option spread strategy where you expect the underlying security to trade within a specific price range. The long put calendar option strategy involves selling a nearer-term expiration put and buying a longer-term expiration put at the same strike price.

The maximum loss is the difference between the premium paid for the long put and the premium received for the short put (Net Debit).

The long put calendar strategy achieves maximum profit if the underlying security is equal to the strike price at the expiration of the nearer-term short put, at which point profit will be equal to the value of the long put.

More information coming soon.

Long Call Diagonal Option Screener

Slightly Bullish | Limited Profit | Limited Loss

The long call or bull call diagonal spread, also known as a poor man's covered call, is a long call diagonal option strategy where you expect the underlying security to remain stable or slightly increase in value. The long call diagonal option strategy involves buying a longer-term expiration call option and selling a nearer-term expiration call option at a higher strike price.

The maximum loss is the difference between the premium paid for the long call and the premium received for the short call (Net Debit). Maximum profit is the difference in strike values minus the Net Debit, if the spread is closed at the first expiration date.

The bull call diagonal strategy succeeds if the security price is above breakeven (lower strike + Net Debit) at expiration. Maximum profit is achieved if the security price is at or below the higher strike price at expiration.

More information coming soon.

Short Call Diagonal Option Screener

Bearish | Limited Profit | Limited Loss

The short call or bear call diagonal spread is a short call diagonal option strategy where you expect the underlying security to remain stable or to slightly decrease in value. The short call diagonal option strategy involves selling a nearer-term expiration call option and buying a longer-term expiration call option at a higher strike price.

Maximum profit is limited to the difference between the premium received for the short call and the premium paid for the long call (Net Credit). Maximum loss is the difference in strike values minus the Net Credit, if the spread is closed at the first expiration date.

The bear call diagonal strategy succeeds if the security price is below breakeven (lower strike + Net Credit) at expiration. Maximum profit is achieved if the security price is below the lower or sold strike at expiration.

More information coming soon.

Long Put Diagonal Option Screener

Bearish | Limited Profit | Limited Loss

The long put or bear put diagonal spread, also known as a poor man's covered put, is a long put diagonal option strategy where you expect the underlying security to remain stable or to slightly decrease in value. The long put diagonal option strategy involves buying a longer-term expiration put option and selling a nearer-term expiration put option at a lower strike price.

Maximum loss is the difference between the premium paid for the long put and the premium received for the short put (Net Debit). Maximum profit is the difference in strike values minus the Net Debit, if the spread is closed at the first expiration date.

The bear put diagonal strategy succeeds if the security price is below breakeven (higher strike - Net Debit) at expiration. Maximum profit is achieved if the security price is at or above the lower strike price at expiration.

More information coming soon.

Short Put Diagonal Option Screener

Slightly Bullish | Limited Profit | Limited Loss

The short put or bull put diagonal spread is a short put option spread strategy where you expect the underlying security to remain stable or to slightly increase in value. The short put diagonal option strategy involves selling a nearer-term expiration put option and buying a longer-term expiration put option at a lower strike price.

Maximum profit is the difference between the premium received for the short put and the premium paid for the long put (Net Credit). Maximum loss is the difference in strike values minus the Net Credit, if the spread is closed at the first expiration date.

The bull put diagonal strategy succeeds if the security price is above breakeven (higher strike - Net Credit) at expiration. Maximum profit is achieved if the security price is above the higher or sold strike at expiration.

More information coming soon.

Neutral | Limited Profit | Unlimited Loss

The short straddle strategy anticipates volatility to decrease and the underlying security to trade within a specific price range. The short straddle option strategy involves selling a call and a put option at identical strike prices.

Maximum loss can be significant if the underlying security aggressively moves in either direction. Maximum profit is the premium received for the short call and short put (Net Credit).

The short straddle strategy succeeds if the underlying security is trading within the range between the downside breakeven (strike - Net Credit) and upside breakeven (strike + Net Credit) at expiration. Maximum profit is achieved if the underlying security lands at the strike price at expiration.

Directional | Unlimited Profit | Limited Loss

The long straddle strategy anticipates volatility to rise and the underlying security to move significantly in either direction. The long straddle option strategy involves buying a call and a put option at identical strike prices.

Maximum loss is the premium paid for the long call and long put (Net Debit). Maximum profit is unlimited, as the security can theoretically rise indefinitely or go to zero.

The long straddle strategy succeeds if the underlying security breaks through the range, trading below the downside breakeven (strike - Net Debit) or above the upside breakeven (strike + Net Debit) at expiration.

Neutral | Limited Profit | Unlimited Loss

The short strangle strategy anticipates volatility to decrease and the underlying security to trade within a specific price range. The short strangle option strategy involves selling a call option and selling a put option at a lower strike price.

Maximum loss can be significant if the underlying security aggressively moves in either direction. Maximum profit is the premium received for the short call and short put (Net Credit).

The short strangle strategy succeeds if the underlying security is trading within the range between downside breakeven (lower strike - Net Credit) and upside breakeven (higher strike + Net Credit) at expiration. Maximum profit is achieved if the underlying security is between the strike prices at expiration.

Directional | Unlimited Profit | Limited Loss

The long strangle strategy anticipates volatility to rise and the underlying security to move significantly in either direction. The long strangle option strategy involves buying a call option and buying a put option at a lower strike price.

Maximum loss is the premium paid for the long call and long put (Net Debit). Maximum profit is unlimited, as the security can theoretically rise indefinitely or go to zero.

The long strangle strategy succeeds if the underlying security breaks through the range, trading below the downside breakeven (lower strike - Net Debit) or above the upside breakeven (higher strike + Net Debit) at expiration.

Neutral | Limited Profit | Limited Loss

The long call butterfly options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The long call butterfly option strategy involves buying a call option, selling 2 call options, and buying a call option, all at equidistant higher strike prices.

The long call butterfly strategy is a combination of a bull call and a bear call spread. Maximum loss is the difference between the premium paid for the long calls minus the premium received for the short calls (Net Debit). Maximum profit is the difference between the center and outer strike values minus the Net Debit.

The long call butterfly strategy succeeds if the underlying security is trading within the range between the downside breakeven (lower strike + Net Debit) and upside breakeven (upper strike - Net Debit) at expiration. Maximum profit is achieved if the underlying security lands at the center strike price at expiration.

Directional | Limited Profit | Limited Loss

The short call butterfly options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The short call butterfly option strategy involves selling a call option, buying 2 call options and selling a call option all at equidistant upper strike prices.

The short call butterfly strategy is a combination of a bear call and a bull call spread. Maximum profit is the difference between the premium received for the short calls minus the premium paid for the long calls (Net Credit). Maximum loss is the difference between the center and outer strike values minus the Net Credit.

The short call butterfly strategy succeeds if the underlying security breaks through the range, trading below the downside breakeven (lower strike + Net Credit) or above the upside breakeven (upper strike - Net Credit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.

Neutral | Limited Profit | Limited Loss

The long put butterfly options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The long put butterfly option strategy involves buying a put option, selling 2 put options and buying a put option, all at equidistant higher strike prices.

The long put butterfly strategy is a combination of a bear put and a bull put spread. Maximum loss is the difference between the premium paid for the long puts minus the premium received for the short puts (Net Debit). Maximum profit is the difference between the center and outer strike values minus the Net Debit.

The long put butterfly strategy succeeds if the underlying security is trading within the range between the downside breakeven (lower strike + Net Debit) and upside breakeven (upper strike - Net Debit) at expiration. Maximum profit is achieved if the underlying security lands at the center strike price at expiration.

Directional | Limited Profit | Limited Loss

The short put butterfly options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The short put butterfly option strategy involves selling a put option, buying 2 put options and selling a put option, all at equidistant higher strike prices.

The short put butterfly strategy is a combination of a bull put and a bear put spread. Maximum profit is the difference between the premium received for the short puts minus the premium paid for the long puts (Net Credit). Maximum loss is the difference between the center and outer strike values minus the Net Credit.

The short put butterfly strategy succeeds if the underlying security breaks through the range, trading below the downside breakeven (lower strike + Net Credit) or above the upside breakeven (upper strike - Net Credit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.

Long Iron Butterfly Option Screener

Directional | Limited Profit | Limited Loss

The long iron butterfly options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The long iron butterfly option strategy involves selling a put option, buying a put and a call option and selling a call option, all at equidistant higher strike prices.

The long iron butterfly strategy is a combination of a bear put and a bull call spread. Maximum loss is the difference between the premium paid for the long call and long put minus the premium received for the short call and short put (Net Debit). Maximum profit is the difference between the center and outer strike values minus the Net Debit.

The long iron butterfly strategy succeeds if the underlying security breaks through the range, trading below the lower downside breakeven (middle strike - Net Debit) or above the upside breakeven (middle strike + Net Debit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.

More information coming soon.

Short Iron Butterfly Option Screener

Neutral | Limited Profit | Limited Loss

The short iron butterfly options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The short iron butterfly option strategy involves buying a put option, selling a put and call option and buying a call option, all at equidistant higher strike prices.

The short iron butterfly strategy is a combination of a bull put and a bear call spread. Maximum profit is the difference between the premium received for the short put and short call minus the premium paid for the long put and long call (Net Credit). The maximum loss is the difference between the center and outer strike values minus the Net Credit.

The short iron butterfly strategy succeeds if the underlying security is trading within the range between the downside breakeven (middle strike - Net Credit) and upside breakeven (middle strike + Net Credit) at expiration. Maximum profit is achieved if the underlying security lands at the center strike price at expiration.

More information coming soon.

Neutral | Limited Profit | Limited Loss

The short iron condor options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The short iron condor option strategy involves buying a put option, selling a put option, selling a call option, and buying a call option, all at consecutively higher strike prices.

The short iron condor is a combination of a bull put spread and a bear call spread. Maximum profit is the difference between the premium received for the short put and short call minus the premium paid for the long put and long call (Net Credit). The maximum loss is the difference between the outer and next strike values, minus the Net Credit.

The short iron condor strategy succeeds if the underlying security is trading within the range between the downside breakeven (lower middle strike - Net Credit) and upside breakeven (upper middle strike + Net Credit) at expiration. Maximum profit is achieved if the underlying security is at or between the middle strike prices at expiration.

Directional | Limited Profit | Limited Loss

The long iron condor options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The long iron condor option strategy involves selling a put option, buying a put option, buying a call option, and selling a call option, all at consecutively higher strike prices.

The long iron condor is a combination of a bear put and a bull call spread. The maximum loss is the difference between the premium paid for the long put and long call minus the premium received for the short put and short call (Net Debit). Maximum profit is the difference between the outer and next strike values minus the Net Debit.

The long iron condor strategy succeeds if the underlying security breaks through the range, trading below the lower downside breakeven (lower middle strike - Net Debit) or above the upside breakeven (upper middle strike + Net Debit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.

Neutral | Limited Profit | Limited Loss

The long call condor options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The long call condor option strategy involves buying a call option, selling a call option, selling a call option, and buying a call option, all at consecutively higher strike prices.

The long call condor is a combination of a bull call and a bear call spread. The maximum loss is the difference between the premium paid for the long calls minus the premium received for the short calls (Net Debit). Maximum profit is the difference between the outer and next strike values minus the Net Debit.

The long call condor strategy succeeds if the underlying security is trading within the range between the downside breakeven (lower strike + Net Debit) and upside breakeven (upper strike - Net Debit) at expiration. Maximum profit is achieved if the underlying security is at or between the center strike prices at expiration.

Neutral | Limited Profit | Limited Loss

The long put condor options spread anticipates volatility to decrease and the underlying security to trade within a specific price range. The long put condor option strategy involves buying a put option, selling a put option, selling a put option, and buying a put option, all at consecutively higher strike prices.

The long put condor is a combination of a bull put and a bear put spread. The maximum loss is the difference between the premium paid for the long puts minus the premium received for the short puts (Net Debit). Maximum profit is the difference between the outer and next strike values minus the Net Debit.

The long put condor strategy succeeds if the underlying security is trading within the range between the downside breakeven (lower strike + Net Debit) and upside breakeven (upper strike - Net Debit) at expiration. Maximum profit is achieved if the underlying security is at or between the center strike prices at expiration.

Directional | Limited Profit | Limited Loss

The short call condor options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The short call condor option strategy involves selling a call option, buying a call option, buying a call option, and selling a call option, all at consecutively higher strike prices.

The short call condor is a combination of a bear call and a bull call spread. Maximum profit is the difference between the premium received for the short calls and the premium paid for the long calls (Net Credit). The maximum loss is the difference between the outer and next strike values, minus the Net Credit.

The short call condor strategy succeeds if the underlying security breaks through the trading range, trading below the lower downside breakeven (lower strike + Net Credit) or upside breakeven (upper strike - net credit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.

Directional | Limited Profit | Limited Loss

The short put condor options spread anticipates volatility to rise and the underlying security to move significantly in either direction. The short put condor option strategy involves selling a put option, buying a put option, buying a put option, and selling a put option, all at consecutively higher strike prices.

The short put condor spread is a combination of a bear put and a bull put spread. Maximum profit is the difference between the premium received for the short puts and the premium paid for the long puts (Net Credit). The maximum loss is the difference between the outer and next strike values, minus the Net Credit.

The short put condor strategy succeeds if the underlying security breaks through the trading range, trading below the lower downside breakeven (lower strike + Net Credit) or upside breakeven (upper strike - Net Credit) at expiration. Maximum profit is achieved if the underlying security is outside either of the outer strike prices at expiration.