Strategy Market Volatility

1 Long Call Very Bullish

2 Short Put Strong bullish
3 Long combo Strong bullish
4 Long call strip Bullish Bullish
5 Long diagonalcalendar spread bullish bullish
6 Short Call Lader Bullish Bulish
7 Long Put Ladder Bullish Bearish
8 Long two by 1 ration call spread Bullish bullish
9 Synthetic Long call Mildly Bullish
10 Covered Call Mildly Bullish
11 Bull Call Spread Strategy Mildly Bullish
12 Bull Put spread strategy Mildly Bullish
13 Short Put Strip Mildly Bullish bearish
14 Long Straddle Volatile
15 Short straddle Neutral
16 Short Strangle Neutral
17 Collar
18 Long call Butterfly Neutral
19 Short Call Butterfly
20 Long Condor Neutral Bearish
21 Short condor Neutral bullish
22 Long Iron Butterfly Neutral bullish
23 Short Iron Butterlfy Neutral Bearish
24 Long Iron Condor Neutral bullish
25 Short Iron Condor Neutral Bearish
26 Long Calendar Spreads Neutral Bullish
27 Long straddle calendar spread neutral bullish
28 Short 2 /1 Call spread Neutral Bearish
29 Long diagonal straddle calendar spread
30 Long Jelly roll Neutral Neutral
31 Long straddle strip Neutral high
32 Long Box Neutral Neutral
33 Short 2 /1 Put spread Neutral Bearish
34 Long Strangle Volatile
35 Covered Put Mildly bearish
36 Bear Call Spread Mildly bearish
37 Bear Put Spread Mildly bearish
38 Short call strip Mildly bearish Bearish
39 Long Put Strip Bearish Bearish
40 Long 2/1 Put spread Bearish Bullish
41 Long call ladder Bearish Bearish
42 Short Put Ladder Bearish Bullish
43 Short Call Very Bearish
44 Long Put Very Bearish
45 Synthetic Long Put Very Bearish
46 Synthetic Long underlying
47 Sybthetic short underlying
 What to do
Buy Call Option
Sell Put option of lower strie price
Sell Lower OTM Put & buy higher OTM call
Buy call at strike A, buy calls at higher strikes
sell nearoption & buy far option of different strike
Sell a call, buy a call at higher, buy a call at eben higher
Sell Put, sell put at higher & buy put at an even higher strike
Sell call & buy 2 calls of higher
Buy Stock & Put of lower strike
Sell OTM call
Buy ITM Call & Sell OTM call
Sell ITM Put & buy OTM Put
sell put at A, sell put at lower for same month
Buy call & put of same strike price
Buy call & put of same strike price
Buy call & put of OTM strike price
Buy stock & call of Otm strike & OTM put
selling 2 ATM Calls, buying 1 ITM Call, and buying 1 OTM Call option

Buy at FOTM,sell two higher strikes,buy hifher OTM

buy straddle sell strangle

sell straddle buy strangle

sell strangle, buy strangle outside sold strangle

Sell near Put, buy far put at same strike
sell straddle near & buy straddle far same strike
Buy a call & sell 2 calls at higher
sell straddle near & buy straddle far for different strike
Buy put sell call in near expiry, sell put buy call in far at same strike
Buy straddles of separate expiry months
Buy call & sell a put, buy put & sell call at higher of same expiry
Buy a Put & sell 2 puts of lower
Buy call & put of OTM strike price
Sell OTM put & sell stock
Sell ITM call buy OTM call
Buy ITM put & sell OTM put
Sell call at strike A, sell calls at higher strikes
Buy Put at A, buy puts of lower strikes
Sell a put buy two put of lower strike
Buy a call, sell a call at higher, sell a call at eben higher
Buy a Put, buy put at higher sell put at still higher strike
Sell Call Option
Buy Put option of lower strike price
Sell Stock & buy OTM call
 Risk Reward
Limited to premium Unlimited
Strike price - Put premium Limited to Premium
Unlimited Unlimited

Stock price +Put Premium-Put stricke price Unlimited

Stock price paid-Call Premium Call Strike price-Stock price paid+Premium recd
Limited to premium Limited to difference in premium
Limited Limited to premium

Limited to premium Unlimited

Unlimited Limited to Premium
unlimited Limited to Premium
Limited Limited
Net debit paid Diff in adjacent strike -Net debit

Max between B & C

limeted

Limited to premium Unlimited

Unlimited if stock price rises substantially Stock price- Strike Price+ Put premium
Limited to difference between strikes - Net premium Limited to premium
Limited to (premium for Long-Premium for short) Limited to difference in strie price sless premium
Unlimited Limited to Premium
Limited to premium Unlimited
Limited Call strie price-stoc price+Premium Stoc price - Call Premium
 Breakeven
Strike Price+Premium Moderate Rise
Put strike price- Premium If you are expecting an underlying security to
Higher strike + net debit
Bull Call Spread

Key Advantage - Reduces the upfront costs c

Key Disadvantage - Profits are limited if the u

Stock price +Put Premium
Bull Put Spread
Strie price of calls +net debit paid
Strike price of Short put - Net premium Key Advantage - Can still profit if the underlyi

Upper BEP =Call strike price+Net premium paid
Strike price of short put -net premium
Strike price of short put -net premium
Purchase price of stoc-Call premium+Put premium
Strike price of higher strike long call- Net premium paid
Key Disadvantage - Limited profits if the unde
Short Put
Key Advantage - Simple strategy with only on

Max at A 7 D Key Disadvantage - Significant losses possib

Significant Rise
The following strategies are recommended fo
buy strangle sell strangle
Long Call

Key Advantage - No limits to the profit that ca

Key Disadvantage - No protection if the price

Short Bull Ratio Spread

Key Advantage - Some protection if the price

Strike price of long put -net premium
Stoc sale price+Put premium Key Disadvantage - Potential profits are lowe
Lower strike + Net credit
Rise to a Specific Level
If you are predicting that the price of an under

Bull Butterfly Spread

Key Advantage - Losses are limited if the und

Strike Price+Premium
Stock price -Premium Key Disadvantage - Requires multiple transac
Stock price -Call Premium
Bull Condor Spread

Key Advantage - High potential return on inve

Key Disadvantage - Higher commissions due t

Moderate Fall
If you are forecasting the price of an underlyi

Bear Put Spread

Key Advantage – Lower upfront costs than bu

Key Disadvantage - Profits are limited if the u

Bear Call Spread

Key Advantage – Can still generate profits eve

Key Disadvantage – Limited profits if the price

Short Call

Key Advantage – Will still make a return if the

Key Disadvantage – Losses are unlimited if th

Significant Fall
Long Put

Key Advantage – Simple strategy involving jus

Key Disadvantage – No protection if the price

Short Bear Ratio Spread

Key Advantage – Some protection if the price

Key Disadvantage – Lower potential profits th

Fall to a Specific Level

If you are expecting the underlying security to
Bear Butterfly Spread

Key Advantage – Losses are limited if the pric

Key Disadvantage – The multiple transactions

No Move
The following strategies are recommended fo

Short Straddle

Key Advantage – You will receive an upfront p

Key Disadvantage – Large losses are possible

Short Strangle

Key Advantage – Can also profit if the price o

Key Disadvantage – Profits are fairly limited.

Butterfly Spread

Key Advantage – This strategy has low upfron

Key Disadvantage – The multiple transactions

No Move or Small Move in Either Direction

The following strategies are suitable for when

Short Gut

Key Advantage – Can profit from three circum

Key Disadvantage – There is the possibility of

Condor Spread

Key Advantage – The potential losses are limi

Key Disadvantage – The potential profits are l

Albatross Spread
Key Advantage – Can profit from a wider rang

Key Disadvantage – Potential profits are limite

Stable in Short Term with a Breakout in Long

If you believe that the price of an underlying

Calendar Strangle

Key Advantage - Potential losses are limited.

Key Disadvantage – Multiple transactions me

Calendar Straddle

Key Advantage – Flexible position that can ea

Key Disadvantage – Higher commission charg

Stable in Short Term with a Rise in Long Term

In circumstances where you expect the price

Calendar Call Spread

Key Advantage – Potential losses are limited.

Key Disadvantage – There is a risk of your call

Stable in Short Term with a Fall in Long Term

If you believe the price of an underlying secu

Calendar Put Spread

Key Advantage – Limit to potential losses.

Key Disadvantages – Your put options can be

Stable but a Possible Rise

When you believe that the price of an underl

Covered Call

Key Advantage – Can profit from a price rema

Key Disadvantage – Potential profits are limite

Stable but a Possible Fall
The following strategy is suitable if you expec

Covered Put

Key Advantage – Can profit from a price rema

Key Disadvantage – Limited profits to be mad

Significant Move in Either Direction

If you believe that an underlying security is vo

Long Straddle

Key Advantage – Profits are potentially unlim

Key Disadvantage – Will incur losses if the un

Long Strangle

Key Advantage – Cheaper than the Long Strad

Key Disadvantage- Requires a larger price mo

Long Gut

Key Advantage – Maximum potential losses a

Key Disadvantage – Higher upfront costs than

Short Butterfly Spread

Key Advantage – Can profit from smaller price

Key Disadvantage – Potential profits are limite

Significant Move in Either Direction but Rise M

The following strategies are good choices whe

Strap Straddle

Key Advantage – Greater profits than the Lon

Key Disadvantage – Higher potential losses th

Strap Strangle

Key Advantage – Lower upfront costs than th

Key Disadvantage – Requires a greater price m

Call Ratio Backspread

Key Advantage – No upfront costs required.

Key Disadvantages – May need a high trading

Significant Move in Either Direction but Fall M

If you believe the price of an underlying secu

Strip Straddle

Key Advantage – Bigger returns than the Long

Key Disadvantage – Potential losses are highe

Strip Strangle

Key Advantage – Upfront costs are lower than

Key Disadvantage – Greater price movement

Put Ratio Backspread

Key Advantage – No upfront costs required.

Key Disadvantage – Your broker may require y

expecting an underlying security to increase in price, but only expect a small increase, then the following strategies are recommended:

tage - Reduces the upfront costs compared to simply buying calls.

vantage - Profits are limited if the underlying security rises significantly.

tage - Can still profit if the underlying security does not rise in price.

vantage - Limited profits if the underlying security rises significantly in price.

tage - Simple strategy with only one option involved, therefore low commissions.

vantage - Significant losses possible if underlying security falls dramatically.

ng strategies are recommended for when you expect the price of an underlying security to rise significantly:

tage - No limits to the profit that can be made.

vantage - No protection if the price of the underlying security falls or fails to move.

Ratio Spread

tage - Some protection if the price of the underlying security falls or fails to move.

vantage - Potential profits are lower than with the Long Call.

pecific Level
predicting that the price of an underlying security will rise to a specific level, you can maximize your potential profits by using the following st

tage - Losses are limited if the underlying security does not perform as expected.
vantage - Requires multiple transactions so the commissions paid will be higher.

tage - High potential return on investment.

antage - Higher commissions due to multiple transactions.

orecasting the price of an underlying security to fall, but only by a small amount, then the following options trading strategies are recomm

tage – Lower upfront costs than buying puts.

antage - Profits are limited if the underlying security falls significantly in price.

tage – Can still generate profits even if the underlying security fails to move in price.

antage – Limited profits if the price of the underlying security falls significantly.

tage – Will still make a return if the underlying security remains stable.

antage – Losses are unlimited if the underlying security increases dramatically in price.

tage – Simple strategy involving just one trade, therefore low commissions.

antage – No protection if the price of the underlying security rises or fails to move.

Ratio Spread

tage – Some protection if the price of the underlying security rises or fails to move.

antage – Lower potential profits than the Long Put.

expecting the underlying security to fall in price, and are reasonably confident that it will fall to a specific level, then the following strategy c
tage – Losses are limited if the price of the underlying security does not move as expected.

antage – The multiple transactions required mean incurring higher commissions.

ing strategies are recommended for when you forecast that the price of an underlying security will stay the same for a period of time:

tage – You will receive an upfront payment when using this strategy.

antage – Large losses are possible if the price underlying security does move too much.

tage – Can also profit if the price of the underlying security does move a little.

antage – Profits are fairly limited.

tage – This strategy has low upfront costs.

antage – The multiple transactions this strategy requires mean higher commission costs.

r Small Move in Either Direction

ing strategies are suitable for when you believe the price of the underlying security will remain relatively stable but might move a little in e

tage – Can profit from three circumstances; stable price, small increase, or small fall.

antage – There is the possibility of large losses from big price moves.

tage – The potential losses are limited.

antage – The potential profits are lower than comparable strategies.

tage – Can profit from a wider range of price moves than other similar strategies.

antage – Potential profits are limited.

hort Term with a Breakout in Long Term

eve that the price of an underlying security will remain relatively stable in the short term but that will move in either direction in the longer

tage - Potential losses are limited.

antage – Multiple transactions mean more paid in commission charges.

tage – Flexible position that can easily be adjusted if your outlook changes.

antage – Higher commission charges due to number of transactions involved.

hort Term with a Rise in Long Term

ances where you expect the price of an underlying security to be fairly stagnant in the short term but then rise in the longer term, the follo

tage – Potential losses are limited.

antage – There is a risk of your call options being assigned.

hort Term with a Fall in Long Term

eve the price of an underlying security won't move much in the short term but start to fall in the long term, the following strategy is recomm

tage – Limit to potential losses.

antages – Your put options can be assigned if the price falls sooner than expected.

a Possible Rise
believe that the price of an underlying security is unlikely to move but may possibly rise and want to cover both outcomes, then the follow

tage – Can profit from a price remaining stable and a rising price.

antage – Potential profits are limited.

 a Possible Fall
ing strategy is suitable if you expect the underlying security to remain stable but think it may possibly fall in price:

tage – Can profit from a price remaining stable and a falling price.

antage – Limited profits to be made.

Move in Either Direction

eve that an underlying security is volatile and likely to move significantly in price but you are unsure in which direction, then the following s

tage – Profits are potentially unlimited.

antage – Will incur losses if the underlying security fails to move significantly.

tage – Cheaper than the Long Straddle.

antage- Requires a larger price move than the Long Straddle.

tage – Maximum potential losses are lower than the Long Straddle or Long Strangle.

antage – Higher upfront costs than the Long Straddle or Long Strangle.

erfly Spread

tage – Can profit from smaller price movements than the Long Straddle or Long Strangle.

antage – Potential profits are limited.

Move in Either Direction but Rise More Likely

ing strategies are good choices when you believe the price of an underlying security is volatile and think that a significant rise is more likely

tage – Greater profits than the Long Straddle if the underlying security rises in price.

antage – Higher potential losses than the Long Straddle.

tage – Lower upfront costs than the Strap Straddle.

antage – Requires a greater price movement than the Strap Straddle to be profitable.

tage – No upfront costs required.

antages – May need a high trading level with your options broker.

Move in Either Direction but Fall More Likely

eve the price of an underlying security is volatile think that a significant fall is more likely than a significant rise, then the following strategie

tage – Bigger returns than the Long Straddle if the underlying security falls in price.

antage – Potential losses are higher than the Long Straddle.

tage – Upfront costs are lower than the Strip Straddle.

antage – Greater price movement required for a return compared to the Strip Straddle.

tage – No upfront costs required.

antage – Your broker may require you have a high trading level for this strategy.
s are recommended:

s by using the following strategies:

ng strategies are recommended:

en the following strategy can help maximize your profits:

for a period of time:

ut might move a little in either direction.

her direction in the longer term, the following strategies are recommended:

the longer term, the following strategy is worthy of consideration:

llowing strategy is recommended:

outcomes, then the following strategy is recommended:

tion, then the following strategies are suitable to use:

nificant rise is more likely than a significant fall:

en the following strategies are recommended: