Cheat sheet
Options Strategies Cheat Sheet: 12 Strategies, Max Profit and Max Loss
This options strategies cheat sheet lists 12 common positions on one page, from a single long call to the iron condor: the market outlook each one fits, and its maximum profit and maximum loss at expiration. New to options? Start with call vs put, then the options strategies overview, and select any strategy name in the table for the lesson that covers it.
Amounts are per share; a standard US stock option covers 100 shares, so multiply by 100 per contract. Width is the distance between a spread's two strikes, debit the net premium you pay and credit the net premium you receive. The figures leave out commissions and early assignment. Use the Print or save as PDF button to keep a copy.
The cheat sheet as text
| Strategy | Outlook | Max profit | Max loss |
|---|---|---|---|
| Long call | Bullish | Unlimited | Premium paid |
| Long put | Bearish | Strike − premium (if the stock falls to zero) | Premium paid |
| Covered call | Neutral to mildly bullish | Call strike − stock cost + premium | Stock cost − premium (if the stock falls to zero) |
| Cash-secured put | Neutral to bullish | Premium received | Strike − premium (if the stock falls to zero) |
| Protective put | Bullish, with a floor under the stock | Unlimited (stock gain − premium) | Stock cost − put strike + premium |
| Bull call spread | Moderately bullish | Width − net debit | Net debit paid |
| Bear put spread | Moderately bearish | Width − net debit | Net debit paid |
| Bull put spread | Neutral to bullish | Net credit received | Width − net credit |
| Bear call spread | Neutral to bearish | Net credit received | Width − net credit |
| Long straddle | Big move either way | Unlimited on the upside; strike − total premium on the downside | Total premium paid |
| Long strangle | Bigger move either way, for less premium | Unlimited on the upside; put strike − total premium on the downside | Total premium paid |
| Iron condor | Neutral, range-bound | Net credit received | Width of the wider spread − net credit |
How to use this cheat sheet
- Start from your view: which way, how far, by when, and whether you expect implied volatility to rise or fall. Then find the row whose outlook matches.
- Know the max loss before you open the trade, and size the position so that loss is one you planned for. The options profit calculator shows the payoff at expiration.
- Check the breakeven, not only the max profit: a long call needs the stock above strike + premium at expiration just to break even.
- Mind time decay: it works against option buyers and for option sellers, and it speeds up as expiration nears. The options Greeks explain why.
- If you sell options, plan for assignment: a covered call can have its shares called away, and a cash-secured put can leave you owning the shares at the strike.
Questions
Which options strategy is the safest?
None is safe; each one trades one risk for another. Long options and vertical spreads cap the loss at a known amount, while a covered call or a cash-secured put still carries most of the stock's downside. Choose by what you can afford to lose, not by the max profit.
What is the difference between a debit spread and a credit spread?
A debit spread costs money up front: max loss = the debit, max profit = width − debit. A credit spread pays you up front: max profit = the credit, max loss = width − credit. Both cap the profit and the loss. See vertical spreads.
What is the difference between a straddle and a strangle?
Both buy a call and a put on the same stock with the same expiration. A straddle uses one strike for both; a strangle uses an out-of-the-money call and put at different strikes, so it costs less but needs a bigger move. The max loss of each is the total premium paid. See straddle and strangle.
Are these max profit and loss figures per share or per contract?
Per share, at expiration and before commissions. A standard US stock option covers 100 shares, so a $2.00 net debit is $200 per contract.
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