Option Setups
12 structures with P&L diagrams, ideal entry conditions, and regime affinity. Select 2-3 to compare side by side.
Directional
4 structuresBet on a move up with capped risk and capped reward. You pay upfront (debit) for a defined-risk directional trade.
Max Gain
Spread width - debit paid
Max Loss
Debit paid
Breakeven
Long strike + debit paid
Target DTE
30-60 DTE
Collect premium by selling a put spread below the current price. You profit if the stock stays above your short strike.
Max Gain
Credit received
Max Loss
Spread width - credit
Breakeven
Short strike - credit
Target DTE
30-60 DTE
Synthetic long exposure using options — buy a call and sell a put at the same delta. Often near-zero cost thanks to skew.
Max Gain
Unlimited above call strike
Max Loss
Strike of put - net premium (large)
Breakeven
Call strike + net debit (or put strike - net credit)
Target DTE
30-60 DTE
Sell an OTM put and collect premium. You're agreeing to buy the stock at the strike price if it drops — like getting paid to set a limit order.
Max Gain
Credit received
Max Loss
Strike price - credit (substantial)
Breakeven
Strike - credit received
Target DTE
30-60 DTE
Volatility
4 structuresSell a near-term option and buy the same strike further out. You profit from the front month decaying faster than the back month.
Payoff shown at front-month expiry. Back-month leg retains time value, creating a tent-shaped P&L centered on the strike.
Max Gain
Realized when stock near strike at front expiry
Max Loss
Net debit paid
Breakeven
Depends on back-month time value at front expiry
Target DTE
30/60 DTE (two expirations)
Buy both a call and a put at the same strike. You profit from a big move in either direction — you just need the stock to move.
Max Gain
Unlimited (either direction)
Max Loss
Total premium paid (both legs)
Breakeven
Strike +/- total premium paid
Target DTE
30-60 DTE
Sell both a put spread and a call spread around the current price. You collect premium and profit if the stock stays in a range.
Max Gain
Total credit received
Max Loss
Wider spread width - credit
Breakeven
Short put - credit / Short call + credit
Target DTE
30-60 DTE
Buy one ATM call and sell two OTM calls. Near-zero cost with leveraged upside up to a point — but unlimited risk above the upper breakeven.
Max Gain
Spread width (at short strike)
Max Loss
Unlimited above upper breakeven
Breakeven
Two breakevens: lower near ATM, upper above short strikes
Target DTE
30-60 DTE
Hedging
2 structuresProtect an existing stock position — buy a put for downside protection, sell a call to finance it. Caps both gains and losses.
Payoff assumes you own the underlying at $600. The collar limits your range to $575-$625.
Max Gain
Stock gains capped at call strike
Max Loss
Stock losses floored at put strike (minus net cost)
Breakeven
Stock price +/- net cost of collar
Target DTE
45-90 DTE
Buy a deep OTM put as crash insurance. Small premium, huge payoff in a market meltdown. The Spitznagel approach.
Max Gain
Strike price - premium (if stock goes to zero)
Max Loss
Premium paid (small)
Breakeven
Strike - premium
Target DTE
30-60 DTE
Extended
2 structuresSell a near-term OTM call and buy a longer-term ATM call. Combines time decay income with directional upside — a calendar spread with a directional tilt.
Payoff shown at front-month expiry. Back-month leg retains time value.
Max Gain
Realized near short strike at front expiry
Max Loss
Net debit paid
Breakeven
Depends on back-month time value at front expiry
Target DTE
30/60 DTE (two expirations)
Sell one ATM call and buy two OTM calls. Opposite of a ratio spread — limited risk with unlimited upside if the stock explodes higher.
Max Gain
Unlimited above upper breakeven
Max Loss
Spread width - net credit (or net debit)
Breakeven
Two breakevens: one near ATM, one above OTM strikes
Target DTE
30-60 DTE