Options Strategies

Explanations and rules for all supported options strategies

Bull Put Spread

Bullish

A bullish vertical spread where you buy a put at a higher strike and sell a put at a lower strike with the same expiration. Maximum profit is achieved when the price closes above the higher strike.

Max Profit: Net credit received (difference in put premiums)
Max Loss: Strike width – credit received
Break-Even: Higher strike – credit received
Setup: Sell OTM Put, buy further OTM Put (bullish)

Bear Put Spread

Bearish

A bearish vertical spread where you sell a put at a higher strike and buy a put at a lower strike. Maximum profit is achieved when the price closes below the lower strike.

Max Profit: Strike width – premium paid
Max Loss: Net premium paid
Break-Even: Higher strike – premium paid
Setup: Buy ATM Put, sell OTM Put (bearish)

Bull Call Spread

Bullish

A bullish vertical spread where you buy a call at a lower strike and sell a call at a higher strike. Maximum profit is achieved when the price closes above the higher strike.

Max Profit: Strike width – premium paid
Max Loss: Net premium paid
Break-Even: Lower strike + premium paid
Setup: Buy ATM Call, sell OTM Call (bullish)

Bear Call Spread

Bearish

A bearish vertical spread where you sell a call at a lower strike and buy a call at a higher strike. Maximum profit is achieved when the price closes below the lower strike.

Max Profit: Net credit received (difference in call premiums)
Max Loss: Strike width – credit received
Break-Even: Lower strike + credit received
Setup: Sell OTM Call, buy further OTM Call (bearish)

Iron Condor

Neutral

A combination of a Bull Put Spread and a Bear Call Spread. The goal is for the underlying price to remain between the two short strikes until expiration.

Max Profit: Total net credit received from both spreads
Max Loss: Width of the wider spread – credit received
Break-Even: Lower: Short Put − credit; Upper: Short Call + credit
Setup: Sell OTM Put + buy lower Put; sell OTM Call + buy higher Call (neutral)

Covered Call

Bullish

You own at least 100 shares of the underlying and sell a call with a strike above current price to generate income.

Max Profit: Credit received + (Strike − share purchase price) × 100
Max Loss: (Share purchase price − credit received) × 100 (if stock goes to 0)
Break-Even: Share purchase price − credit received
Setup: Hold 100 shares, sell OTM Call (mildly bullish / neutral)

Cash-Secured Put

Bullish

You sell a put and set aside enough cash to buy 100 shares at the strike price. Goal is premium income or acquiring shares at a discount.

Max Profit: Credit received
Max Loss: (Strike − credit) × 100 (if stock goes to 0)
Break-Even: Strike − credit received
Setup: Sell OTM Put, secure Strike × 100 in cash (neutral to bullish)

Wheel Strategy

Bullish

A systematic cycle: 1. Sell Cash-Secured Puts. 2. If assigned, sell Covered Calls. 3. If called away, repeat with Puts.

Max Profit: Ongoing premiums from Puts and Calls + capital gains on shares
Max Loss: Downside equity risk on assigned shares minus all accumulated premiums
Break-Even: Average cost basis minus all collected premiums
Setup: Start with CSP, switch to Covered Calls upon assignment (long-term bullish)

Read the Wheel tracking guide →