Options strategy explorer: 15 strategies

Adam Alouane

Financial markets researcher: FINVIRO

In short: The complete reference: when and how to use each of the 15 most common strategies. Reading time: one minute. A free lesson from Finviro Academy.

FINVIRO ACADEMY, Lesson 1

Every market outlook has an ideal options strategy. The wrong strategy at the right time can lose money. This reference matches each outlook to its best-fitting strategy.

Strategy map

Outlook	Strategy	Max profit	Max loss
Strongly bullish	Long Call	Unlimited	Premium
Strongly bearish	Long Put	Strike − premium	Premium
Moderately bullish + income	Covered Call	Strike + premium	Stock − premium
Bullish, waiting to buy	Cash-Secured Put	Premium	Strike − premium
Limited bullish	Bull Call Spread	Bid − net	Net paid
Limited bearish	Bear Put Spread	Bid − net	Net paid
Quiet, wide	Iron Condor	Total premium	Bid − premium
Quiet, narrow	Iron Butterfly	Higher premium	Bid − premium
Big move, either direction	Long Straddle	Unlimited	Both premiums
Big move, likely direction	Long Strangle	Unlimited	Both premiums
Portfolio hedge	Protective Put	Unlimited	Premium
Bullish + hedge	Collar	Limited	Limited

Straddle: trading volatility

Straddle = buy a Call + a Put at the same strike (ATM) and the same expiry

Profits if the stock moves sharply in either direction
Fits: ahead of earnings and big events
Loses: if the stock stays flat, as theta eats the premium daily

IV Crush: the risk after earnings

Important note

Ahead of earnings, IV rises. Right after the announcement it collapses (IV Crush). A buyer can lose even when the stock moves the right way, because IV Crush wipes out the gain from the move. The fix: use a Debit Spread instead of a single option.

Key takeaway

Every market outlook has an ideal options strategy. There is no single answer for all of them.
Straddle and Strangle profit from big volatility in either direction
Iron Condor and Butterfly profit from quiet markets and falling volatility
IV Rank tells you whether to be a buyer or a seller
Set in advance: max profit, max loss, and exit point, before you enter

Apply the lesson now

What you just read works on today's data: where the call and put walls and the Gamma Flip (Gamma Flip) sit for each major index, calculated from open interest.

Today's Gamma levels →

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