Options Strategies
Explore a few common option strategies and see how OptionLab visualizes their payoff and risk.
Long Butterfly Spread
A limited-risk strategy built around a target price, with capped profit and capped loss.
See how it works →Iron Condor
A range-bound strategy that profits when the price stays between two levels, with defined risk on both sides.
See how it works →Covered Call
A stock-and-call strategy that can generate option premium while keeping upside exposure to the underlying.
See how it works →Bull Call Spread
A defined-risk bullish strategy that uses two call strikes to target a rise in the underlying price.
See how it works →Straddle
A strategy built to benefit from a large price move in either direction, with risk limited to the premium paid.
See how it works →Calendar Spread
Two expirations, one strike — profits from the difference in how quickly each option decays.
See how it works →Iron Butterfly
A credit strategy built around a target price, combining a short straddle with protective wings.
See how it works →Diagonal Spread
Different strikes and different expirations, combining a directional view with time decay.
See how it works →Compare Strategies at a Glance
Per share, at expiration (at the near-term expiration for calendar and diagonal spreads). Assumes positions are held until then; ignores commissions, taxes, dividends and early assignment.
| Strategy | Outlook | Construction | Max Profit | Max Loss | Breakeven(s) |
|---|---|---|---|---|---|
| Long Butterfly Spread | Neutral, near the middle strike | Buy 1 lower call, sell 2 middle calls, buy 1 higher call (equally spaced) | Middle − lower strike − net debit | Net debit | Lower strike + debit; higher strike − debit |
| Iron Condor | Neutral, between the short strikes | Sell a put spread below and a call spread above the price | Net credit | Wider spread's width − net credit | Short put − credit; short call + credit |
| Covered Call | Neutral to moderately bullish | Own the underlying, sell 1 call against it | Strike − purchase price + premium | Purchase price − premium (if the underlying falls to zero) | Purchase price − premium |
| Bull Call Spread | Moderately bullish | Buy 1 call, sell 1 higher-strike call | Strike difference − net debit | Net debit | Lower strike + debit |
| Straddle | Large move, either direction | Buy 1 call and 1 put, same strike | Unlimited on the upside; strike − debit on the downside | Net debit | Strike − debit; strike + debit |
| Calendar Spread | Neutral near the strike, short term | Sell near-dated, buy farther-dated, same strike | Depends on volatility and time | Net debit for a call calendar closed at the near-term expiration | Depend on volatility and time |
| Iron Butterfly | Neutral, at the middle strike | Sell a put and a call at the middle strike, buy both wings | Net credit | Wider wing's width − net credit | Middle strike − credit; middle strike + credit |
| Diagonal Spread | Depends on the strikes | Sell near-dated, buy farther-dated, different strikes | Depends on volatility and time | Net debit for a call diagonal with long strike ≤ short strike, closed at the near-term expiration; otherwise can exceed the debit | Depend on strikes, volatility and time |
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