Options strategy explainers
How fourteen common options structures are built, where each one gains and loses, and the risks that are easy to overlook. These describe mechanics for learning; they are not suggestions to trade any of them. In the TradeToday terminal you can load each structure as a template and practise it with virtual money.
Long callBuy one call.Long putBuy one put.Bull call spreadBuy a lower-strike call and sell a higher-strike call, same expiry.Bear put spreadBuy a higher-strike put and sell a lower-strike put, same expiry.Bull put spread (credit)Sell a higher-strike put and buy a lower-strike put, same expiry.Bear call spread (credit)Sell a lower-strike call and buy a higher-strike call, same expiry.Long straddleBuy a call and a put at the same strike and expiry.Short straddleSell a call and a put at the same strike and expiry.Long strangleBuy an out-of-the-money call and an out-of-the-money put, same expiry.Short strangleSell an out-of-the-money call and an out-of-the-money put, same expiry.Iron condorA short strangle plus a further out-of-the-money long call and long put as protection.Iron butterflySell a call and a put at the same strike and buy a further call and put as wings.Call ratio spreadBuy one call and sell two higher-strike calls.Put ratio spreadBuy one put and sell two lower-strike puts.