Married Put

An options trading strategy designed to protect an investor from drastic drops in the price of a stock.  The investor, while holding a long position on a stock, purchases an at-the-money put option of the same stock to protect themselves against depreciation in the...

Long Strangle

A similar strategy to a straddle but with utilizing options at different strike prices.  A strangle options strategy is achieved when an investor has a position in a call and a put option with different strike prices but with the same expiration date and underlying...

Long Straddle

An options trading strategy involving a trader purchasing a long call and a long put on the same underlying asset at the same strike price and with the same expiration date.  The objective is to profit from a very strong move in either direction by the underlying...

Iron Condor

A trading strategy attempting to profit from the low volatility of an underlying asset.  An iron condor options strategy consists of two puts (a long and a short) and two calls (also a long and a short) along with four strike prices, all with the same expiration...

Iron Butterfly

An options trade that uses 4 different contracts as part of a wider strategy to benefit from stocks or futures prices moving within a defined range.  It is constructed similarly to a short-straddle trade, with a long call and long put option purchased for protection. ...

Debit Spread

Also called a net debit spread.  A strategy involving a investor simultaneously buying an option with a higher premium and selling an option with a lower premium.  The investor is said to be a “net buyer” and expects the premiums of the two options (or the...

Credit Spread

An options strategy involving the purchase of one option and the sale of a second option in the same class and expiration but with different strike prices.  This is designed to make a profit when the spreads between the two options narrows.  Investors receive net...

Bull Call Spread

An options trading strategy designed to take advantage of a stock’s limited increase in price.  It achieves this by placing two call options to create a range consisting of a lower and upper strike price.  This helps limit the losses (but also caps the gains). ...

Bear Put Spread

An options trading strategy used by a bearish investor to maximize profit and minimize loss.  When the trader expects the decline of a security or asset price, a bear put spread may be implemented by purchasing put options while also selling the same number of puts on...

“Greeks”

A way of understanding the risk exposures related to an option or a book of options.  Options traders will refer to the delta, gamma, vega, and theta of their option positions, referring to measurements of the sensitivity of an option’s price relative to...