Option Strategies — Neutral, Bullish and Bearish:
Neutral Option Strategies
#SHORT STRANGLE /¯\ :– Sell Lower Put / Sell Higher Call – Limited Profit / Unlimited Upside and Downside Loss
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Call Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Unlimited Downside & Upside Loss
#SHORT STRADDLE /\ :– Sell same Strike Call and Put – Limited Profit / Unlimited Loss
OBJECTIVE: Underlying to stay at same Strike
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Unlimited Downside & Upside Loss
#LONG IRON BUTTERFLY CALL _/\_ :– Sell 2x the Middle / Buy OTM Wings (Similar to Bull Put + Bear Call) – Limited Profit / Limited Loss
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Width of Widest Width - Net Premiums
#SHORT IRON CONDOR _/¯\_ :– Buy Lower Put and Sell Higher Put / Sell Higher Call and Buy even Higher Call (= Bull Put + Bear Call) -- Low Volatility / Limited Profit / Limited Loss but better than same Strike Straddle or Butterfly / Maximum Profit if Underlying b/n Strangle.
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS (Upside): Width of Bear Call - Net Premiums
MAX LOSS (Downside): Width of Bull Put - Net Premiums
Neutral Option Strategies (Cont'd.)
#SHORT STRANGLE /¯\ :– Sell Lower Put / Sell Higher Call – Limited Profit / Unlimited Upside and Downside Loss
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Call Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Unlimited Downside & Upside Loss
#SHORT STRADDLE /\ :– Sell same Strike Call and Put – Limited Profit / Unlimited Loss
OBJECTIVE: Underlying to stay at same Strike
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Unlimited Downside & Upside Loss
#LONG IRON BUTTERFLY CALL _/\_ :– Sell 2x the Middle / Buy OTM Wings (Similar to Bull Put + Bear Call) – Limited Profit / Limited Loss
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS: Width of Widest Width - Net Premiums
#SHORT IRON CONDOR _/¯\_ :– Buy Lower Put and Sell Higher Put / Sell Higher Call and Buy even Higher Call (= Bull Put + Bear Call) -- Low Volatility / Limited Profit / Limited Loss but better than same Strike Straddle or Butterfly / Maximum Profit if Underlying b/n Strangle.
OBJECTIVE: Underlying to stay within Strikes
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Put Strike + Net Premiums
BREAKEVEN (Downside): OTM Short Put Strike - Net Premiums
MAX LOSS (Upside): Width of Bear Call - Net Premiums
MAX LOSS (Downside): Width of Bull Put - Net Premiums
Bullish Option Strategies:
#SHORT PUT __/ :– Sell Put – Limited Profit / Unlimited Downside Loss
OBJECTIVE: Underlying to stay / move Above Short Put Strike -- Bullish
MAX PROFIT: Net Premiums
BREAKEVEN: Short Put Strike - Net Premiums
MAX LOSS (Downside): Unlimited if Underlying is Below Short Put Strike
#LONG CALL __/ :– Buy Call – Unlimited Profit / Limited Downside Loss
OBJECTIVE: Underlying to stay / move Above Long Call Strike -- Bullish
MAX PROFIT: Unlimited Premium Increase
BREAKEVEN: Long Call Strike + Premium
MAX LOSS: Premium
#LONG STRADDLE V :– Buy same Long Strike Call and Put – High Volatility / Unlimited Profit / Limited Loss
OBJECTIVE: Underlying to move Beyond either Strike
MAX PROFIT: Unlimited Premium Increase
BREAKEVEN (Upside): Short Put Strike + Net Premiums
BREAKEVEN (Downside): Short Put Strike - Net Premiums
MAX LOSS: Limited
#BULL PUT CREDIT _/¯ :– Sell Higher Put / Buy Lower Put -- Limited Profit / Limited Loss
OBJECTIVE: Underlying to stay / move Above Short Put Strike
MAX PROFIT: Net Premiums Limited Profit / (Higher Strike - Lower Strike) + Net Premiums
BREAKEVEN: Short Put Strike - Net Premiums (12300 - $3.50 = 12266.5)
MAX LOSS (Upside): Limited if Underlying is Above Lower Strike Long Put (Width of Bull Put - Net Premiums)
MAX LOSS (Downside): Width of Bull Put - Net Premiums (100 - $3.50 = 66.50 pts x $/pt = $332.50)
#SHORT IRON BUTTERFLY CALL ¯\/¯ :– Buy 2x Call at the Middle / Sell OTM Wing Calls (Similar to Bull Put + Bear Call) – Limited Profit / Limited Loss
OBJECTIVE: Underlying to move Above or Below OTM Short Calls
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Call Strike - Net Premiums
BREAKEVEN (Downside): OTM Short Call Strike + Net Premiums
MAX LOSS (Downside): Width of Bull Put - Net Premiums
#1x2 CALL RATIO __/\ :– Buy Lower Call and Sell 2x Higher Calls (Like Strangle
\
but Buy Lower Call instead of Short Put) -- Limited Profit / Unlimited Upside Loss
instead of Short Put) -- Limited Profit / Unlimited Upside Loss
OBJECTIVE: Underlying to move to Short Higher Strike -- Mildly Bullish
MAX PROFIT: Higher Strike - Lower Strike + Net Premiums
BREAKEVEN (Upside): Higher Strike + Net Premiums aka Higher Strike + Maximum Profit (= Strike Widths + Premiums)
MAX LOSS (Upside): Unlimited
MAX LOSS (Downside): Limited if Underlying is Below Lower Strike Long Call
Bullish Option Strategies: (Cont'd.)
#1x2 PUT RATIO /\__ :– Buy Higher Put and Sell 2x Lower Puts (Like Bull Put Debit
/
Width, Strangle, Straddle or Butterfly but Buy Higher Put instead of Short Call) -- Limited Profit / Unlimited Downside Loss
OBJECTIVE: Underlying to move to Short Lower Strike -- Mildly Bullish
MAX PROFIT: Higher Strike - Lower Strike + Net Premiums
BREAKEVEN: Lower Strike - Maximum Profit (= Strike Widths + Net Premiums)
BREAKEVEN: Higher Strike + Net Premiums
MAX LOSS (Upside): Limited if Underlying is Above Higher Strike Long Put
MAX LOSS (Downside): Unlimited
#SHORT CALL CALENDAR V (curved) :– Buy Nearer Call / Sell Further same Strike Call -- Limited Profit / Limited Loss / Ditto with Puts
OBJECTIVE: Underlying to move Above or Below same Strike Calls
MAX PROFIT: Net Premiums At Expiration of Long Near Call
BREAKEVEN (Upside): Long Call Strike + Net Premiums subject to underlying, Theta and Short Call Volatility
BREAKEVEN (Downside): Short Put Strike - Net Premiums subject to underlying, Theta and Short Call Volatility
MAX LOSS: If Underlying is At same (√) Short and Long Call Strike -- Limited to Net Premiums
NOTE: If constructed at different Strikes (Bear Call or Bull Put) = Diagonal Calendar Width
#JADE LIZARD /¯\_ :– Strangle + Higher Long Call – Low Volatility / Limited Profit
/
/ Unlimited Downside Loss (but better than same Strike Straddle (Big Lizard) or Butterfly)
OBJECTIVE: Neutral to Bullish / Underlying to stay within Strikes
MAX PROFIT: Net Premiums if Underlying at or Above Lower Short Put Strike
BREAKEVENS (Upside): Higher Short Call + Net Premiums (or Width Bear Call + Premiums) / Limited or No B/E if Net Premiums > Width Bear Call = small profit
BREAKEVENS (Downside): Lower Short Put - Net Premiums
MAX LOSS (Upside): Width of Bear Call - Net Premiums
MAX LOSS (Downside): Unlimited
Bearish Option Strategies:
#SHORT CALL ¯\_ :– Sell Call – Limited Profit / Unlimited Upside Loss
OBJECTIVE: Underlying to stay / move Below Short Call Strike -- Bearish
MAX PROFIT: Net Premiums
BREAKEVEN: Short Call Strike + Net Premiums
MAX LOSS: Unlimited if Underlying is Above Short Call Strike
#LONG PUT ¯\_ :– Buy Put – Unlimited Profit / Limited Loss
OBJECTIVE: Underlying to stay / move Below Long Put Strike -- Bearish
MAX PROFIT: Net Premiums Unlimited (to zero)
BREAKEVEN: Premiums
MAX LOSS (Downside): Unlimited if Underlying is Below Short Put Strike
#BEAR CALL CEDIT ¯\_/¯ :– Sell Lower Call / Buy Higher Call – Limited Profit / Limited Loss
OBJECTIVE: Underlying to stay / move Below Short Call Strike
MAX PROFIT: Net Premiums = (Higher Strike - Lower Strike) + Net Premiums
BREAKEVEN: Short Call Strike + Net Premiums
MAX LOSS (Upside): Width of Bear Call - Net Premiums // (100 - $3.50 = 66.50 pts x $/pt = $332.50)
MAX LOSS (Downside): Limited if Underlying is Below Higher Long Call
#SHORT IRON BUTTERFLY CALL ¯\/¯ :– Buy 2x Call at the Middle / Sell OTM Wing Calls (Similar to Bull Put + Bear Call) – Limited Profit / Limited Loss
OBJECTIVE: Underlying to move Above or Below OTM Short Calls
MAX PROFIT: Net Premiums
BREAKEVEN (Upside): OTM Short Call Strike - Net Premiums
BREAKEVEN (Downside): OTM Short Call Strike + Net Premiums
MAX LOSS (Downside): Width of Bull Put - Net Premiums
#1x2 PUT RATIO /\_ :– Buy Higher Put and Sell 2x Lower Puts (Like Bull Put Debit
/
Width, Strangle, Straddle or Butterfly but Buy Higher Put instead of Short Call Call) -- Limited Profit / Unlimited Downside Loss
OBJECTIVE: Underlying to move to Short Lower Strike -- Mildly Bearish
MAX PROFIT: Higher Strike - Lower Strike + Net Premiums
BREAKEVEN: Lower Strike - Maximum Profit (= Strike Widths + Net Premiums)
BREAKEVEN: Higher Strike + Net Premiums
MAX LOSS (Upside): Limited if Underlying is Above Higher Strike Long Put
MAX LOSS (Downside): Unlimited
#1x2 CALL RATIO _/\ :– Buy Lower Call and Sell 2x Higher Calls (Like Strangle
\
but Buy Lower Call instead of Short Put) -- Limited Profit / Unlimited Upside Loss
OBJECTIVE: Underlying to move to Short Higher Strike -- Mildly Bearish
MAX PROFIT: Higher Strike - Lower Strike + Net Premiums
BREAKEVEN (Upside): Higher Strike + Net Premiums aka Higher Strike + Maximum Profit (= Strike Widths + Premiums)
MAX LOSS (Upside): Unlimited
MAX LOSS (Downside): Limited if Underlying is Below Lower Strike Long Call
Bearish Option Strategies (Cont'd.)
#1x2 PUT RATIO VOLATILITY BACK /¯¯ :– Buy 2x Lower Puts and Sell Higher Put (Like Strangle but Buy Higher Put instead of Short Call) – Large Downside Profit / Limited or No Volatility / Limited Upside Loss
OBJECTIVE: Underlying to move Below 2x Lower Long Puts
MAX PROFIT: Substantial on Downside move to Below 2x Lower Long Puts / Higher Strike - Lower Strike + Net Premiums
BREAKEVENS (Upside): Higher Short Put Strike + Net Premiums
BREAKEVENS (Downside): Lower Long Put Strike - Maximum Loss At Lower Long Put Strike - Maximum Loss At Lower (√) Long Put Strike
MAX LOSS (Upside): Limited and at Maximum if Underlying is At Lower (√) Long Put Strike
MAX LOSS (Downside): Lower Long Put Strike + Net Premiums / Limited and at Maximum if Underlying is At Lower (√) Long Put Strike
#SHORT CALL CALENDAR V (curved) :– Buy Nearer Call / Sell Further same Strike Call -- Limited Profit / Limited Loss / Ditto with Puts
OBJECTIVE: Underlying to move Above or Below same Strike Calls
MAX PROFIT: Net Premiums At Expiration of Long Near Call
BREAKEVEN (Upside): Long Call Strike + Net Premiums subject to underlying, Theta and Short Call Volatility
BREAKEVEN (Downside): Short Put Strike - Net Premiums subject to underlying, Theta and Short Call Volatility
MAX LOSS: If Underlying is At same (√) Short and Long Call Strike -- Limited to Net Premiums
NOTE: If constructed at different Strikes (Bear Call or Bull Put) = Diagonal Calendar Width
#REVERSE JADE LIZARD _/¯\ :– Strangle + Lower Long Put – Low Volatility /
\
Limited Profit / Unlimited Loss (but better than same Strike Straddle (Big Lizard) or Butterfly)
OBJECTIVE: Neutral to Bearish / Underlying to stay within Strikes
MAX PROFIT: Net Premiums if Underlying at or above Higher Short Call Strike
BREAKEVENS (Upside): Higher Short Call + Net Premiums
BREAKEVENS (Downside): Lower Short Put - Net Premiums (or Width Bull Put + Premiums) / Limited or No B/E if Net Premiums > Width Bull Put = small profit
MAX LOSS (Upside): Unlimited
MAX LOSS (Downside): Width of Bull Put - Net Premiums
Bullish Bull Put Credit Spread -- Example Statistics:
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