A bear call spread is a limited-risk, limited-reward strategy, consisting of one short call option and one long call option.
A bear put spread consists of buying one put and selling another put, at a lower strike, to offset part of the upfront cost.
This strategy is the combination of a bear call spread and a bear put spread.
This strategy consists of buying one call option and selling another at a higher strike price to help pay the cost.
A bull put spread is a limited-risk, limited-reward strategy, consisting of a short put option and a long put option with a lower strike.
This strategy is the combination of a bull call spread and a bull put spread.
Goal: Positioning to profit from an increase in the level of the underlying index.
Goal: Positioning to profit from a decrease in the level of the underlying index.
This strategy allows an investor to purchase stock at the lower of strike price or market price during the life of the option.
The cash-secured put involves writing a put option and simultaneously setting aside the cash to buy the stock if assigned.
The investor adds a collar to an existing long stock position as a temporary, slightly less-than-complete hedge against the effects of a possible near-term decline.
This strategy consists of writing a call that is covered by an equivalent long stock position.
This strategy is used to arbitrage a put that is overvalued because of its early-exercise feature.
This strategy profits if the underlying stock moves up to, but not above, the strike price of the short calls.
This strategy is appropriate for a stock considered to be fairly valued.
This strategy consists of buying a call option.
This strategy profits if the underlying stock is at the body of the butterfly at expiration.
This strategy combines a longer-term bullish outlook with a near-term neutral/bearish outlook.
This strategy profits if the underlying security is between the two short call strikes at expiration.