Option Strategies

The fundamental of Listed OptionsWhat options areWhat makes up an OptionThe benefits of Trading optionsHow rights and obligations are involved with optionsWhat it means to have a long or short positionThe core strategies

Long Call• Strategy: Long Stock• Example: Buy Stock at $50.00• Breakeven Point: $50.00• Maximum Risk: $50.00• Profit Potential: Unlimited

Long Stock

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Long Stock

Short Stock• Strategy: Short Stock• Example: Sell Short Stock at $50.00• Breakeven Point: $50.00• Maximum Risk: Unlimited• Profit Potential: $50

Short Stock

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Short Stock

Long Call• Strategy: Long Call• Example: Long Strike $50.00 at $5.00• Breakeven Point: $55.00• Maximum Risk: $5.00• Profit Potential: Unlimited

Long Call

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Long Call

Short Call• Strategy: Sell Short Call• Example: Sell Short Strike $50.00 Call at $5.00• Breakeven Point: $50.00• Maximum Risk: Unlimited• Profit Potential: $5.00

Short Call

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Short Call

Long Put• Strategy: Long Put• Example: Long Strike $50.00 Put at $5.00• Breakeven Point: $45.00• Maximum Risk: $5.00• Profit Potential: $45.00

Long Put

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Long Put

Short Put• Strategy: Short Put• Example: Sell Short Strike $50.00 Put at $5.00• Breakeven Point: $45.00• Maximum Risk: $45.00• Profit Potential: $5.00

Short Put

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Short Put

Long Straddle• Strategy: Long Call, Long Put• Example: Long Strike $50.00 Call at $5.00 and Put at $5.00• Breakeven Point: $40.00 & $60.00• Maximum Risk: $10.00• Profit Potential: $40.00 or Unlimited

Long Straddle

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Long CallLong PutLong Straddle

Short Straddle• Strategy: Short Call, Short Put• Example: Sell Short Strike $50.00 Call at $5.00 and Put at

$5.00• Breakeven Point: $40.00 & $60.00• Maximum Risk: $40.00 or Unlimited• Profit Potential: $10.00

Short Straddle

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Short CallShort PutShort Straddle

Long Strangle• Strategy: Long Call, Long Put• Example: Long Strike $53.00 Call at $5.00 and Strike $50.00 Put at $5.00• Breakeven Point: $40.00 & $63.00• Maximum Risk: $10.00• Profit Potential: $40.00 or Unlimited

Long Strangle

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Long CallLong PutLong Strangle

Short Strangle• Strategy: Short Call, Short Put• Example: Sell Short Strike $50.00 Call at $5.00 and Strike $47.00 Put at $5.00• Breakeven Point: $37.00 & $60.00• Maximum Risk: $37.00 or Unlimited• Profit Potential: $10.00

Short Strangle

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Short CallShort PutShort Strangle

Covered Call• Strategy: Long Stock, Short Call• Example: Buy Stock at $50.00, Sell Short Strike $50.00 Call at $5.00• Breakeven Point: $45.00• Maximum Risk: $45.00• Profit Potential: $5.00

Covered Call

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Long StockShort CallCovered Call

Covered Put• Strategy: Short Stock, Long Put• Example: Sell Short Stock at $50.00, Long Strike $50.00 Call at $5.00• Breakeven Point: $55.00• Maximum Risk: Unlimited• Profit Potential: $5.00

Covered Call

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Short StockShort PutCover Put

Ratio Call• Strategy: Long Call, Short Calls at Higher Strike • Example: Long Strike at $50.00 Call at $5.00, Sell Short Strike

$70.00 3-Calls at $1.00• Breakeven Point: $52.00 & $76.00• Maximum Risk: $2.00 & Unlimited• Profit Potential: $16.00

Ratio Call

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Long CallShort CallLong Straddle

Ratio Put• Strategy: Long Put, Short Puts at Lower Strike • Example: Long Strike at $50.00 Put at $5.00, Sell Short Strike

$30.00 3-Puts at $1.00• Breakeven Point: $24.00 & $48.00• Maximum Risk: $48.00 & $2.00• Profit Potential: $16.00

Ratio Put

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Long PutShort PutLong Straddle

Bull Call Spread• Strategy: Long Call at Lower Strike, Short Call at Higher Strike• Example: Long Strike at $45.00 Call at $10.00, Sell Short Strike

$65.00 Call at $5.00• Breakeven Point: $50.00• Maximum Risk: $5.00• Profit Potential: $5.00

Bull Call Spread

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Long CallShort CallLong Straddle

Bearish Put Spread• Strategy: Long Put at Lower Strike, Short Put at Higher Strike• Example: Long Strike at $55.00 Put at $10.00, Sell Short Strike

$35.00 Call at $5.00• Breakeven Point: $50.00• Maximum Risk: $5.00• Profit Potential: $5.00

Bearish Put Spread

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Long PutShort PutLong Straddle