8.6

Other Strategies

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.

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 an uncovered call option.

A naked put involves writing a put option without the reserved cash on hand to purchase the underlying stock.

This strategy consists of adding a long put position to a long stock position.

Sponsored By:

  • OCC

OIC Participant Exchanges:

  • BOX
  • Cboe
  • MIAX
  • Nasdaq
  • NYSE

OCC 125 South Franklin Street, Suite 1200 | Chicago, IL 60606

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606.

© 1998-2018 The Options Industry Council - All rights reserved.

User acknowledges review of the User Agreement and Privacy Policy governing this site. Continued use constitutes acceptance of the terms and conditions stated therein.