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Strategy playbook and intuition. Reach for the strategy builder to visualize any of these.

Strategy Playbook

Intuition first, math second. Reach for the strategy builder to visualize any of these.

Long Call

Bullish

Buy a call to profit from upside beyond the strike plus premium. Loses value to theta if the stock stalls.

Max risk
Limited to premium paid
Max reward
Unlimited

Long Put

Bearish

Buy a put as a directional bet or portfolio hedge. Most expensive when IV is elevated — check IV rank first.

Max risk
Limited to premium paid
Max reward
Substantial (strike minus premium, down to 0)

Covered Call

Neutral to mildly bullish

Own 100 shares, sell one call. Income strategy. Caps upside beyond the strike.

Max risk
Stock downside minus premium collected
Max reward
Premium + (strike − cost basis) if called away

Cash-Secured Put

Willing buyer at lower price

Sell a put with cash to cover assignment. You either keep the premium or buy the stock at an effective discount.

Max risk
Stock drop minus premium collected
Max reward
Premium

Bull Call Spread

Mildly bullish

Buy lower-strike call, sell higher-strike call. Cheaper than long call but caps upside.

Max risk
Net debit
Max reward
(Difference in strikes) − debit

Bear Put Spread

Mildly bearish

Buy higher-strike put, sell lower-strike put. Mirror image of bull call spread.

Max risk
Net debit
Max reward
(Difference in strikes) − debit

Iron Condor

Neutral / low-volatility

Sell OTM put spread + OTM call spread. Profits if the stock stays between short strikes through expiry. High IV is your friend here.

Max risk
(Wing width) − credit
Max reward
Net credit

Straddle

Big move, direction unknown

Buy ATM call and ATM put. Expensive; needs a move larger than total premium to profit. Often used around earnings.

Max risk
Both premiums
Max reward
Unlimited on either side

Calendar Spread

Neutral, expects IV expansion

Sell near-dated, buy longer-dated at the same strike. Profits from front-month theta and back-month vega.

Max risk
Net debit
Max reward
Peaks at short strike near front expiry

Thinking in Greeks

Every option position is a bundle of exposures: direction (delta), convexity (gamma), time decay (theta), volatility (vega), and rates (rho). Strategy selection is really exposure selection.

Want direction without paying for vol? Spreads — you finance one leg with another.

Want to collect theta? Short premium — iron condors, credit spreads. Pair with IV rank so you sell when vol is expensive, not cheap.

Want to profit from a big move without guessing direction? Straddles and strangles. These are long vega and long gamma — they love volatility expansion.

IV rank vs IV percentile

IV Rank = where current IV sits between its 1-year min and max (0–100%). IV Percentile = fraction of days over the past year when IV was below the current level. Rank is sensitive to outliers; percentile is more robust. Use the volatility surface page to see both.