Learn / Structures

Core option structures

A structure is how a view is expressed with listed options: acquire or hold shares, take a defined directional spread, sit in a range, substitute for the stock, or position for a breakout. Each card names the outlook, when the structure fits, where the loss is bounded, and the point you have to manage. Open the lesson for the payoff.

Compare picks among four bullish rows. Analyze coaches one ticket.

Own or acquire shares

Cash-secured put

Bullish / Neutral

Best used when: You want to acquire a stock at a discount and are willing to buy 100 shares lower while collecting premium to wait.
Max risk: Substantial. Assignment forces stock purchase at the strike price, minus premium received.
Management: Requires full cash collateral in your account. The stock can fall significantly past your break-even.

Covered call

Neutral / Mildly Bullish

Best used when: You already own 100 shares of stock and want to generate incremental income by capping your upside potential.
Max risk: Stock ownership downside. Risk of major decline, offset only by the premium received.
Management: Your upside is strictly capped at the short call strike. You may be forced to sell your shares upon assignment.

Protective put

Long-Term Bullish

Best used when: You own underlying shares and want to buy insurance (a floor) against a severe near-term market correction.
Max risk: Defined by the put strike price plus the cost of the put premium.
Management: The ongoing cost of buying puts acts as a drag on long-term performance if the market keeps rising.

Defined direction

Bull call spread

Moderately Bullish

Best used when: You want a directional play with a defined upfront cost (debit) rather than buying expensive shares or naked options.
Max risk: Strictly defined. Limited strictly to the net debit paid to enter the spread.
Management: Profit is capped at the width of the strikes minus the net debit. Time decay (theta) works against you.

Bear put spread

Moderately Bearish

Best used when: You expect a downward move in a stock and want a defined-risk, lower-cost way to profit than buying standalone puts.
Max risk: Strictly limited to the net debit paid to enter the spread.
Management: Profits are capped when the stock reaches the lower long put strike.

Bull put spread

Bullish / Neutral

Best used when: You are bullish or neutral and want to collect high-probability income by betting a stock stays above a support level.
Max risk: Defined. The difference between strikes minus the credit received.
Management: If the stock drops sharply below the short strike, you face maximum loss quickly.

Range and pin

Iron condor

Neutral

Best used when: You expect low volatility and want the underlying asset to trade sideways within a specific, wide price range.
Max risk: Defined. The maximum risk is the wing width minus the initial credit received.
Management: Requires active management or adjustment if the stock price breaches either short strike.

Iron butterfly

Neutral

Best used when: You expect a pin-point price target at expiration and want a tighter, higher-credit alternative to an iron condor.
Max risk: Defined. Wing width minus the initial credit received, but carries a higher probability of touching max loss.
Management: Narrower profit zone than an iron condor; requires precise range prediction or active management.

Calendar spread

Neutral / Range-bound

Best used when: You expect the underlying asset to remain stable near a specific strike price, capitalizing on faster front-month decay.
Max risk: Defined strictly by the net debit paid to enter the multi-expiry position.
Management: Highly sensitive to implied volatility shifts and sudden directional price gaps through the strike.

Stock substitute

Diagonal / PMCC

Moderately Bullish

Best used when: You want a leveraged alternative to a covered call with lower capital requirements using mismatched expirations.
Max risk: Defined by the net debit paid. However, the long-dated deep-ITM call can still lose significant value.
Management: Requires careful delta selection on the long leg (usually ≥0.80) to mimic stock behavior safely.

Poor man's covered call

Moderately Bullish

Best used when: You want high capital efficiency to run a covered call strategy without tying up capital in 100 actual shares.
Max risk: Limited to the initial net debit paid for the structure.
Management: Exercise caution with early assignment on the short leg, which can create complex execution requirements.

Breakout

Long straddle

High Volatility / Breakout

Best used when: You anticipate an explosive, massive price move in either direction (e.g., earnings announcements) but don't know which way.
Max risk: Limited to the total combined premium paid for both the call and the put.
Management: Requires a massive price movement that overcomes heavy dual time decay (theta) working against both options.