Knowledge Center

Bear Call Spread

Credit Call Spread

Sell a call and buy a higher-strike call. You take in a credit and want the share price to stay below the short strike.

Bear Put Spread

Buy a put and sell a lower-strike put. The short put trims the cost of a bearish view.

Bear Spread Spread

Double Bear Spread, Combination Bear Spread

A bear call spread and a bear put spread held together, so the position leans down from both the call side and the put side.

Bull Call Spread

Debit Call Spread

Buy a call and sell a higher-strike call. The short call reduces what you pay for a bullish view.

Bull Put Spread

Credit Put Spread

Sell a put and buy a lower-strike put. You collect a credit and want the shares to stay above the short strike.

Buying Index Calls

Buy a call on an index when you want upside on the index level, with the loss limited to the premium.

Buying Index Puts

Buy a put on an index when you want to benefit if the index level falls, with the loss limited to the premium.

Cash-Backed Call

Cash-Secured Call

Buy a call with cash set aside, instead of paying for the shares today. The premium is the most you can lose.

Cash-Secured Put

Sell a put and keep enough cash to buy the shares if you are assigned. You are paid a credit while you wait.

Collar

Protective Collar

Own the shares, buy a put, and sell a call. The call helps pay for the put that cushions a drop.

Covered Call

Buy/Write

Own the shares and sell a call against them. The credit adds income if the shares stay below the strike.

Covered Put

Short the shares and sell a put against that short. You take in a credit and want the price to drift lower or sit still.

Covered Ratio Spread

Own the shares and sell more calls than the shares cover. Extra premium raises income, and extra risk appears above the strike.

Covered Strangle

Covered Combination

Own the shares, sell a higher call, and sell a lower put. Two credits, with an obligation on both sides.

Double Bull Spread

A bull call spread and a bull put spread together. One side pays a debit, the other takes a credit, and both want a higher price.

Long Call

Buy a call. You have the right to the upside above the strike, and the most you can lose is the premium.

Long Call Butterfly

Buy one lower call, sell two middle calls, and buy one higher call. The position costs a debit and peaks if price expires at the middle strike.

Long Call Calendar Spread

Call Horizontal

Sell a near-term call and buy a longer-term call at the same strike. You want the shares near that strike when the short call expires.

Long Call Condor

A call condor with a flat top: buy the lowest call, sell two calls in the middle at different strikes, and buy the highest call.

Long Condor

Buy the inner call and put spreads and sell the outer wings. You pay a debit and need a move beyond the inner strikes.

Long Iron Butterfly

Buy the at-the-money call and put, and sell a put and a call further out. You need a large move to clear the debit.

Long Put

Buy a put. You gain if the shares fall below the strike, and the most you can lose is the premium.

Long Put Butterfly

Buy one higher put, sell two middle puts, and buy one lower put. It is a debit that pays most if price expires at the middle strike.

Long Put Calendar Spread

Put Horizontal

Sell a near-term put and buy a longer-term put at the same strike. The position wants price near the strike at the front expiry.

Long Put Condor

A put condor that profits when price finishes between the two short strikes. You pay a debit for a defined band.

Long Ratio Call Spread

Buy one lower call and sell two higher calls. The extra short call cheapens the trade and leaves open risk if price runs.

Long Ratio Put Spread

Buy one higher put and sell two lower puts. Cost stays low, and a deep drop can overwhelm the position.

Long Stock

Buy the shares. You participate fully in gains and losses, and you may collect dividends if the company pays them.

Long Straddle

Buy a call and a put at the same strike. You need a large move in either direction to cover the two premiums.

Long Strangle

Long Combination

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

Naked Call

Uncovered Call, Short Call

Sell a call without owning the shares. You keep the credit if price stays below the strike, and the upside loss is not capped.

Naked Put

Uncovered Put, Short Put

Sell a put without setting the purchase cash aside as a formal covered plan. You are paid to take downside.

Protective Put

Married Put

Own the shares and buy a put. The put sets a floor under the holding while the shares stay free to rise.

Short Call Butterfly

Sell the wings and buy the body of a call butterfly. You take in a credit and want price to finish away from the middle strike.

Short Call Calendar Spread

Short Call Time Spread

Buy the near call and sell the longer call at the same strike. You want the shares to move away from the strike, or implied volatility to fall.

Short Condor

Iron Condor

Sell an out-of-the-money put spread and an out-of-the-money call spread. You keep the credit if price stays between the short strikes.

Short Iron Butterfly

Sell the at-the-money call and put, and buy a wing on each side. You want price to finish near the middle.

Short Put Butterfly

The put version of a short butterfly. You take a credit and want price away from the middle strike at expiry.

Short Put Calendar Spread

Short Put Time Spread

Buy the near put and sell the longer put at the same strike. You want a move away from the strike or a drop in implied volatility.

Short Ratio Call Spread

Sell one lower call and buy two higher calls. A quiet or falling price can keep a credit, and the extra long call opens room if price surges.

Short Ratio Put Spread

Sell one higher put and buy two lower puts. You can keep a credit if price holds up, and the extra long put helps if price collapses.

Short Stock

Borrow and sell the shares. You gain if the price falls, and you owe any dividends while the short is open.

Short Straddle

Sell a call and a put at the same strike. You keep the credit if price stays near that strike.

Short Strangle

Sell an out-of-the-money call and an out-of-the-money put. You have a wider quiet zone than a straddle, and a smaller credit.

Stock Repair

Covered Ratio Spread

Shares are already held at a higher cost. Buy one call and sell two higher calls so a partial rebound can repair more of the loss.

Synthetic Long Put

Short the shares and buy a call. Together they behave like a long put: downside participation with a cap on the upside loss.

Synthetic Long Stock

Buy a call and sell a put at the same strike. The pair tracks the shares: up without limit, and down toward zero.

Synthetic Short Stock

Sell a call and buy a put at the same strike. The pair tracks a short share position.