24 strategies with payoff shape, structure, trade examples, and the regime where each works best.
A four-leg, defined-risk strategy that combines a short call spread above the market and a short put spread below it — all on the same underlying and expiration. Maximum profit is the net credit collected; you keep it all if the underlying closes between the two short strikes at expiration.
The iron condor is one of the most widely used premium-selling structures because it defines risk on both sides while collecting income from two separate credit spreads.
IV rank ≥ 50, 30–45 DTE. Best in stable, range-bound markets after a volatility spike. The higher the IV, the wider the strikes can be placed while still collecting meaningful credit.
A sustained directional move through a short strike turns this into a losing trade. Vega is negative — IV expansion hurts. Manage early by buying back at 50% of max credit to avoid the high-gamma final weeks.
An iron condor variant where both short options are sold at the same ATM strike rather than at separate OTM strikes. This collects significantly more premium but creates a much narrower profit zone — the underlying needs to stay very close to the short strike.
IV rank ≥ 50, 30–45 DTE. Works well after a volatility event when the market has already made its move and is expected to mean-revert and settle. Higher credit than an iron condor in exchange for the tighter range.
Gamma risk is extreme near expiration — small moves cause large P&L swings. The narrow breakeven range means even modest moves can push the trade into a loss. Take profit well before expiration (50–75% of max credit).
Sell an OTM call and an OTM put on the same underlying and expiration. Undefined risk on both sides, but collects more premium than a spread-based structure and has a wider profit zone than a straddle. High probability of profit when IV is elevated and the underlying is range-bound.
IV rank ≥ 50, 45 DTE. Best in high-IV, stable environments. Requires a margin account. Use 1-standard-deviation strikes (∼16-delta) to maintain high probability of profit.
Undefined risk on both sides — a gap move can cause losses that quickly exceed the premium collected. Requires active management; define your max loss before entry and honor it.
Sell an ATM call and ATM put at the same strike and expiration. This is the highest-premium, highest-risk income structure — it collects the most credit of any two-leg trade but requires the underlying to stay very close to the short strike.
IV rank ≥ 60, 30–45 DTE. Best immediately after a major volatility event (earnings, Fed decision) when the move has already happened but IV is still elevated. Close at 25–50% of max credit.
Extreme gamma exposure near expiration; any significant move can rapidly turn profit into loss. Only appropriate for experienced traders with significant buying power and disciplined risk management.
Hold 100 shares and sell one OTM call against them. The premium collected provides income and reduces the cost basis on the position. If the stock rises above the call strike, the shares are called away — you keep the premium but forgo further upside.
IV rank ≥ 30, 30–45 DTE. Ideal for neutral to moderately bullish outlook on an existing long stock position. Choose a strike you’d be comfortable selling the stock at.
Capped upside — a strong rally above the strike means leaving significant gains on the table. The short call does not protect against a large decline in the stock.
Sell an OTM put while holding enough cash to buy 100 shares at the strike price if assigned. Generates income in flat to moderately bullish markets — effectively getting paid to agree to buy a stock you want to own at a lower price.
IV rank ≥ 30, 30–45 DTE. Best when you want to own the stock anyway and are happy to buy it at the strike price. The covered call’s mirror image — the two are synthetically equivalent.
Assignment means owning a stock that has already fallen. If the stock drops sharply below the strike, you hold a losing position. Only sell puts on stocks you genuinely want to own.
Sell an OTM put and buy a further OTM put for protection on the same expiration. A defined-risk income strategy — collects a net credit and profits when the underlying stays above the short put strike. The long put caps the maximum loss at the spread width minus the credit.
IV rank ≥ 30, 30–45 DTE. Bullish to neutral outlook with defined downside. The preferred alternative to a naked short put for traders with lower approval levels.
Full max loss is realized if the underlying closes below the long strike. Position the short strike at a price level where you’d be comfortable owning the stock.
Sell an OTM call and buy a further OTM call for protection on the same expiration. Collects a net credit and profits when the underlying stays below the short call strike. The long call defines and caps the maximum loss.
IV rank ≥ 30, 30–45 DTE. Bearish to neutral outlook. Often paired with a bull put spread on the same expiry to form an iron condor.
Full max loss if underlying closes above the long call strike. Active management: close at 50% of max profit to lock in gains without holding through the high-gamma final weeks.
Buy a deep ITM LEAPS call as a low-cost substitute for owning 100 shares, then sell shorter-dated OTM calls against it. Replicates the covered call structure with roughly 85% less capital required. The long LEAPS acts as the stock position; the short monthly calls generate income against it.
IV rank ≥ 30 for short calls. LEAPS purchased when IV is low. Best when you want covered call income without tying up full stock capital. Always ensure the short call strike stays above the LEAPS breakeven.
If the stock falls significantly, the LEAPS loses value faster than the short call credits accumulate. The short call must never be sold at a strike below the LEAPS breakeven — this creates a losing structure called a “diagonal trap.”
Buy a call option to profit from an expected rise in the underlying. Maximum loss is the premium paid; upside is theoretically unlimited. The most straightforward expression of a bullish directional view using options.
IV rank low to moderate, 45–60 DTE. Buy when IV is cheap so you’re not overpaying for the extrinsic value. Needs a significant, timely move to overcome daily time decay.
Negative theta — time decay erodes value every day. IV contraction after purchase reduces the option’s value even if the stock moves in your favor.
Buy a put option to profit from an expected decline in the underlying, or to hedge an existing long stock position. Maximum loss is the premium paid. Gain is substantial as the underlying falls, capped only when it reaches zero.
IV rank low to moderate, 45–60 DTE. Use as a directional bearish bet or as portfolio insurance. Buy when IV is cheap — not after volatility has already spiked and premiums are rich.
Negative theta; time decay works against long puts just as with long calls. Needs the underlying to move far enough, fast enough, to offset the cost of premium.
Sell a call without owning the underlying. Collects premium upfront as the maximum possible gain; the loss is theoretically unlimited if the underlying rises sharply. Requires the highest brokerage approval level and is reserved for experienced, well-capitalized traders.
IV rank high, 30–45 DTE. Bearish to neutral outlook. Only appropriate with a disciplined, pre-defined exit plan and sufficient buying power to absorb adverse moves.
Unlimited loss potential. A single gap move can exceed all premium collected from months of trades. Almost always preferable to use a bear call spread for the same directional view with defined risk.
Sell a put without a cash reserve to cover assignment. Collects larger premium than a cash-secured put but requires substantial margin. The cash-secured put and the naked short put have the same P&L profile — the difference is capital efficiency and account structure.
IV rank ≥ 35, 30–45 DTE. Bullish to neutral. Only appropriate for well-capitalized margin accounts with active position monitoring.
Significant downside if the underlying falls sharply. A margin call can force liquidation at the worst time. Prefer a bull put spread for similar directional exposure with defined risk.
Buy a call at a lower strike and sell a call at a higher strike for a net debit on the same expiration. A cost-reduced, defined-risk alternative to the long call for a moderately bullish view. Both maximum profit and maximum loss are fixed at entry.
IV rank low to moderate, 30–45 DTE. Moderately bullish outlook. Reduces the upfront cost of a long call by capping the upside — the right trade when you expect a moderate rather than explosive move.
Capped upside — a large bull move still delivers only the spread width. Time decay still hurts (though less than a straight long call); the position needs the underlying to move in your direction by expiration.
Buy a put at a higher strike and sell a put at a lower strike for a net debit on the same expiration. A defined-risk bearish trade — profits when the underlying falls, with both loss and gain capped at entry.
IV rank low to moderate, 30–45 DTE. Moderately bearish outlook. The defined-risk alternative to buying a naked put — reduced cost and reduced reward, same directional bias.
A large bearish move still delivers only the spread width. The position is a net debit — time decay is a headwind, particularly if the underlying stays flat.
An asymmetric butterfly where the wings are unequal widths — typically structured as a net credit rather than a debit. The skip-strike design eliminates risk on one side of the trade while retaining high profit potential near the body strike.
IV rank ≥ 35, 21–45 DTE. When you have a directional lean and want to collect a credit while keeping a high-probability profit zone. The directional bias determines which way to “skip the wing.”
The wider upper wing creates a loss zone if the underlying moves significantly past the upper long strike. Know the exact max loss before entry and size accordingly.
Buy an ATM call and ATM put at the same strike and expiration. Profits from a large move in either direction — the underlying must move enough to cover both premiums paid. The defining long-volatility strategy before binary events.
IV rank low to moderate, 30–60 DTE. Before earnings, Fed decisions, or binary macro events — buy before IV expands, not after. The longer-dated the contract, the more time for the move to develop.
IV crush (the rapid drop in IV after a catalyst) is the primary risk — the stock can move but still lose money if IV collapses more than the move gains. Time decay is a constant headwind.
Buy an OTM call and an OTM put on the same underlying and expiration. Cheaper than a long straddle but requires a larger move to profit. The wider breakeven range means lower cost but higher required movement to reach profitability.
IV rank low, 30–60 DTE. When you expect a significant catalyst but want cheaper exposure than a straddle. Ideal when you have a slight directional lean — skew the strikes toward your expected direction.
Needs a larger move than the straddle; a moderate catalyst often fails to push the underlying far enough to cover both premiums. IV crush is still a significant risk.
Buy one option at a lower strike, sell two at a middle (body) strike, and buy one at a higher strike — equal wing widths, same expiration. A defined-risk, low-cost position that pays off when the underlying pins exactly at the body strike. Low probability, high reward-to-risk multiple.
IV rank low, 14–21 DTE. When you expect the underlying to pin near a specific price. Often used as a cheap, high-leverage bet on an exact landing price — not a high-probability trade.
Very narrow profit zone; a small miss on the body strike significantly reduces the payout. The trade needs time to work (the closer to expiry, the more the body strike matters).
Sell a near-term option and buy a longer-dated option at the same strike. Profits from the faster time decay of the short leg and potential IV expansion in the back month. The profit diagram assumes valuation at front-month expiration.
Front-month IV higher than back-month IV (normal in earnings calendars). Long 60 DTE / Short 30 DTE is a common starting structure. Vega-positive — benefits from IV expansion in the back month.
A large directional move in either direction hurts the position. IV contraction in the back month (after a catalyst resolves) can also reduce profitability even if the underlying pins at the strike.
Buy a longer-dated option at one strike and sell a shorter-dated option at a different strike. Combines the time decay advantage of a calendar spread with a directional bias. A highly versatile structure used for rolling income with defined risk — the backbone of the Poor Man’s Covered Call.
IV rank low to moderate. Long leg: 60–90 DTE. Short leg: 30–45 DTE. Best when you have a directional lean but want time and IV on your side. Commonly used as a rolling income strategy.
A large adverse move reduces the long leg’s value faster than the short leg credits accumulate. The short call strike must always remain above the long call’s breakeven to avoid a locked-in loss.
Hold a long stock position and buy an OTM put to set a floor on potential losses. The put gains value as the stock falls, offsetting portfolio losses below the strike price. Acts as portfolio insurance with a known, defined cost.
Any IV environment, 60–90 DTE. Use when holding a significant long equity position through a period of elevated macro uncertainty, earnings, or political risk.
The premium cost is a drag on portfolio returns. If the stock rises strongly, the put expires worthless — a cost of insurance that wasn’t needed. Size the put strike to balance cost vs. protection needed.
Own stock, buy a protective put below the current price, and sell a call above it. The call premium offsets or eliminates the put cost. Defines both the maximum loss (put strike) and maximum gain (call strike) on the position — often structured at zero net cost.
Any IV environment, 30–90 DTE. When you want to protect an existing position without paying net premium, or when protecting a large unrealized gain through a risk period.
Upside is capped by the short call — if the stock surges past the call strike, all additional gains are forfeited. A zero-cost collar may not be possible if the call and put are far out of balance in IV or strike selection.
Buy an ATM call and sell an ATM put at the same strike and expiration. Replicates the full P&L profile of owning 100 shares using only options — full upside exposure, full downside exposure, significantly less capital required than purchasing the stock outright.
Any IV environment, 30–60 DTE. When you want full long-stock exposure without tying up stock capital. Requires margin approval. Roll forward before expiration to maintain continuous exposure.
Full downside exposure — mirrors the risk of owning the stock. The short put carries assignment risk; if assigned, you own 100 shares at the strike. Margin calls can occur if the position moves significantly against you.
The Alpha Bridge™ framework shows you how to select, size, and manage these trades inside a professional-grade risk framework.
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