Options strategies and payoff diagrams
Work through calls, puts, stock hedges and spreads. Explore whole-position profit, loss and assignment tradeoffs.
Browse the full library →Long Calls and Long Puts: Direction, Timing and Premium
Buying a call or put creates a limited-premium option position, but the stock must move far enough, soon enough, to overcome its cost at expiration.
Strategy explained · IntermediateCovered Calls: Premium Income, Capped Upside and Stock Risk
A covered call combines shares with a short call against those shares. The premium provides a small cushion while the call caps upside and can cause the shares to be sold.
Strategy explained · IntermediateCash-Secured Puts: Purchase Obligations and Downside
A cash-secured put sells a put while reserving enough cash to buy the shares if assigned. The reserve funds the obligation; it does not prevent a loss.
Strategy explained · IntermediateProtective Puts: A Defined Floor with an Ongoing Cost
A protective put combines stock with a purchased put. It places a floor under the position’s expiration value for a specified period, at the cost of the premium.
Strategy explained · IntermediateOption Collars: Trading Some Upside for Downside Protection
A collar holds stock, buys a put and sells a call. The call premium can offset the put’s cost while limiting gains above the call strike.
Strategy explained · IntermediateVertical Debit Spreads: Bull Calls and Bear Puts
A debit vertical buys an option and sells another of the same type and expiration at a different strike. The short leg reduces entry cost while limiting the favorable expiration payoff.
Strategy explained · IntermediateVertical Credit Spreads: Bear Calls and Bull Puts
A credit vertical receives premium by selling one option and buying a farther protective option of the same type and expiration. The credit is the maximum expiration profit under the stated structure.
Strategy explained · IntermediateLong Straddles and Strangles: Paying for a Large Move
A long straddle buys a call and put at the same strike; a long strangle uses different strikes. Both pay premiums to benefit from a sufficiently large move in either direction.
Strategy explained · IntermediateIron Condors: A Range Trade with Four Option Legs
A short iron condor combines a put credit spread and a call credit spread with one expiration. It earns a limited credit if the underlying remains in the favorable region, while retaining losses outside it.