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Strategy library

62 option strategies, explained and drawn

Every strategy in the Trident Strategy Lab, with its legs, payoff, maximum profit and loss and break-evens. Pick one to see it in detail, or filter by outlook.

Single options, and options with shares 16

Single options are the building blocks: the right to buy (a call) or to sell (a put) 100 shares at a fixed price, the strike, until expiry. Combined with shares, they add income or protection to a holding.

Long call

Pay a premium for the right to buy; profit grows as the price rises.

Long put

Pay a premium for the right to sell; profit grows as the price falls.

Short call

Collect a premium and keep it if the price stays below the strike. Loss is open-ended above it.

Short put

Collect a premium and keep it if the price stays above the strike.

Covered call

Own 100 shares and sell a call against them for income; upside is capped at the strike.

Cash-secured put

Sell a put with cash set aside to buy the shares at the strike if assigned.

Protective (married) put

Own the shares and buy a put as insurance; the loss below the strike is capped.

Covered put

Short 100 shares and sell a put against them; profit is capped at the strike.

Protective call

Short the shares and buy a call to cap the loss if the price rises.

Collar

Own the shares, buy a put and pay for it by selling a call: a floor and a ceiling.

The wheel

Sell cash-secured puts until assigned, then sell covered calls on the shares.

Covered strangle

Covered call plus a short put: more income, and more shares bought if the price falls.

Covered straddle

Own the shares and sell an at-the-money call and put for the largest premium.

Stock repair

Shares bought higher, plus a 1×2 call spread at little or no cost, to lower the break-even.

Deep in-the-money call (stock replacement)

A call with little time value that moves almost like the shares for a fraction of the cash.

ZEBRA (zero extrinsic back ratio)

Two in-the-money calls against one at the money: the time value nets to about zero, so it behaves like stock.

Vertical spreads 4

A vertical spread buys one option and sells another of the same type and expiry at a different strike. The sold option pays for part of the bought one and caps the result on both sides.

Bull call spread

Buy a call and sell a higher one: a cheaper bullish bet with capped profit.

Bear put spread

Buy a put and sell a lower one: a cheaper bearish bet with capped profit.

Bull put spread

Sell a put and buy a lower one for protection: a credit that is kept above the short strike.

Bear call spread

Sell a call and buy a higher one for protection: a credit that is kept below the short strike.

Volatility bets 8

These structures care more about how far the price moves than which way. Long versions pay when the move is large; short versions collect premium when the price stays put.

Long straddle

Buy a call and a put at the same strike: profit from a large move either way.

Long strangle

Buy an out-of-the-money call and put: cheaper than a straddle, needs a bigger move.

Short straddle

Sell a call and a put at the same strike: profit if the price stays near it. Loss is open-ended.

Short strangle

Sell an out-of-the-money call and put: profit if the price stays between them.

Strap

Two calls and one put at the same strike: a straddle that pays more on a rise.

Strip

One call and two puts at the same strike: a straddle that pays more on a fall.

Long guts

Buy an in-the-money call and an in-the-money put: a strangle built from the inside.

Short guts

Sell an in-the-money call and put: profit if the price stays between the strikes.

Condors and butterflies 11

Condors and butterflies combine spreads so the profit sits in a zone around a price, with the risk on each side capped by the outer options, the wings.

Iron condor

A bull put spread plus a bear call spread: a credit kept if the price stays in the range.

Iron butterfly

A short straddle with protective wings: a bigger credit, a narrower profit zone.

Reverse iron condor

The iron condor bought instead of sold: a debit that pays on a move out of the range.

Reverse iron butterfly

A long straddle with the wings sold to cut its cost.

Long call butterfly

Buy one low and one high call, sell two in the middle: a cheap bet on a pinned price.

Long put butterfly

The same pinned-price bet built with puts.

Short butterfly

The butterfly sold: a small credit that pays when the price leaves the middle.

Broken-wing butterfly

A put butterfly with a wider lower wing: often opened for a credit, with no risk above.

Long condor

A butterfly with a flat top: profit across a wider middle band.

Short condor

The condor sold: profit when the price leaves the middle band.

Christmas tree butterfly

Buy 1, sell 3 higher, buy 2 higher again: a cheap butterfly leaning to a modest rise.

Ratios and ladders 6

Ratios and ladders sell more options than they buy, or the other way round. That lowers the cost but leaves one side with large or open-ended risk.

Call ratio spread

Buy one call and sell two higher: profit up to the short strike, open-ended risk above.

Put ratio spread

Buy one put and sell two lower: profit down to the short strike, large risk below.

Call backspread

Sell one call and buy two higher: open-ended profit on a big rise.

Put backspread

Sell one put and buy two lower: large profit on a big fall.

Bull call ladder

A bull call spread with a second short call higher: cheaper, but open-ended risk on a big rise.

Bear put ladder

A bear put spread with a second short put lower: cheaper, but large risk on a big fall.

Combinations 6

Combinations mix calls and puts to shape the payoff, often to pay for one part of the trade with another.

Jade lizard

A short put plus a bear call spread; when the credit exceeds the call width there is no upside risk.

Reverse jade lizard

A short call plus a bull put spread; when the credit exceeds the put width there is no downside risk.

Seagull

A bull call spread paid for by selling a put below.

Risk reversal

Buy an out-of-the-money call and sell an out-of-the-money put: a near-zero-cost bullish position.

Synthetic long stock

Long call and short put at the same strike: moves one for one with the shares.

Synthetic short stock

Short call and long put at the same strike: moves one for one against the shares.

Time spreads 7

Time spreads use options with different expiry dates. The near option loses value faster, and the payoff is read at the near (front) expiry while the later option still has time left.

Call calendar

Sell a near call and buy a later one at the same strike: profit from the near one's faster decay.

Put calendar

The calendar built with puts.

Short calendar

Buy the near call and sell the later one: profit from a large move before the near expiry.

Double calendar

A put calendar below and a call calendar above: a wider profit tent.

Diagonal spread

Sell a near out-of-the-money call against a later at-the-money call.

Double diagonal

A put diagonal and a call diagonal: an iron condor with long-dated wings.

Poor man's covered call

A deep in-the-money long-dated call in place of shares, with near calls sold against it.

Portfolio 1

Portfolio structures protect a whole book rather than a single trade.

Portfolio crash hedge

A put about 10% below the price: cheap protection that pays in a sharp fall.

Arbitrage and desk trades 3

These structures lock in a result at the start. Their value is tied to interest rates and to small mispricings, so financing and trading costs decide whether they are worth doing.

Box spread

A bull call spread plus a bear put spread on the same strikes: a fixed payoff, priced like a loan.

Conversion

Long shares, long put, short call at the same strike: a locked-in result if the prices are out of line.

Reversal

The mirror of the conversion: short shares, short put, long call at the same strike.

Payoffs use one illustrative model: underlying at 100, implied volatility 25%, 45 days to expiry. Not a recommendation. Options carry risk of loss.

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