Learn Options Trading
Understand the strategies our scanner uses. Each card explains the mechanics, risk profile, and ideal market conditions.
Covered Call
Own the stock and sell calls against it to generate income.
Components
Long Stock + Short Call
Best for
Sideways or slightly bullish markets.
Example
Own 100 shares of XYZ at $50. Sell $55 call for $2 premium. Max profit: $7/share.
Long Call
Buy a call option to profit from upward price movement.
Components
Long Call
Best for
Strongly bullish markets.
Example
Buy $50 call for $3. Break-even: $53. Profit if stock exceeds $53.
Long Put
Buy a put option to profit from downward price movement.
Components
Long Put
Best for
Strongly bearish markets.
Example
Buy $50 put for $3. Break-even: $47. Profit if stock falls below $47.
Put Credit Spread
Sell a higher-strike put and buy a lower-strike put for a net credit.
Components
Short Put (higher) + Long Put (lower)
Best for
Moderately bullish or neutral markets.
Example
Sell $45 put for $2, buy $40 put for $1. Net premium: $1. Max loss: $400/spread.
Call Credit Spread
Sell a lower-strike call and buy a higher-strike call for a net credit.
Components
Short Call (lower) + Long Call (higher)
Best for
Moderately bearish or neutral markets.
Example
Sell $55 call for $2, buy $60 call for $1. Net premium: $1. Max loss: $400/spread.
Iron Condor
Combine a put credit spread and call credit spread to profit from range-bound markets.
Components
Short Put + Long Put + Short Call + Long Call
Best for
Low volatility, sideways markets.
Example
Sell $45 put/$55 call, buy $40 put/$60 call. Net premium: $1. Profit if stock stays $45-$55.
Short Strangle
Sell an OTM call and OTM put to collect premium when expecting low volatility.
Components
Short Call (OTM) + Short Put (OTM)
Best for
Low volatility with high implied volatility.
Example
Sell $55 call/$45 put for $3 total. Max profit: $300 if stock stays $45-$55.
Cash-Secured Put
Sell a put while holding cash to buy shares if assigned. Enter positions at a discount.
Components
Short Put + Cash Reserve
Best for
Neutral to bullish when wanting to buy stock cheaper.
Example
XYZ at $50. Sell $45 put for $2. Keep $200 if above $45, or buy at effective $43.