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Learn options trading

Free, practical lessons on how options work — then dive into each strategy with construction, risk/reward, and a link to the matching profit calculator.

Start with the basics

New to options? Work through these foundations before multi-leg structures.

Options basics What Are Options? Learn what stock options are, how calls and puts work as contracts, and why traders use them for leverage, income, and hedging. Options basics Calls and Puts Explained Understand long and short calls and puts: rights, obligations, profit shapes, and when each side makes sense. Options basics Moneyness, Expiration & Time Decay Learn ITM, ATM, and OTM moneyness, how expiration works, and why time decay (theta) matters for option buyers and sellers. Pricing & risk Option Greeks Explained Delta, gamma, theta, vega, and rho explained in plain language — how each Greek measures option risk and P/L sensitivity. Pricing & risk Implied Volatility (IV) What implied volatility means, how IV rank affects premium, IV crush after events, and how volatility views shape strategy choice. Pricing & risk Payoff Diagrams & Breakevens How to read option payoff diagrams, calculate breakeven prices, and use max profit/loss to size risk before expiration. Strategy foundations Debit vs Credit Spreads Debit spreads vs credit spreads: cash flow at entry, risk graphs, when each structure is preferred, and defined-risk rules of thumb. Strategy foundations Exercise, Assignment & Early Exercise How option exercise and assignment work, American-style early exercise risk, pin risk, and what cash-secured and covered strategies imply. Strategy foundations Options Risk Management Basics Position sizing, defined vs undefined risk, portfolio Greeks, and practical rules for using an options profit calculator responsibly.

Basic strategies

Basic · bullish Long Call A long call is a bullish, defined-risk way to participate in upside with less capital than buying 100 shares. Basic · bearish Long Put A long put profits when the underlying falls. Defined risk makes it a common hedge or bearish speculation tool. Basic · neutral Covered Call Own (or buy) stock and sell a call against it to generate income, accepting capped upside if shares are called away. Basic · bullish Cash Secured Put Sell a put while reserving cash to buy 100 shares if assigned — income strategy with a bullish-to-neutral bias. Basic · bearish Naked Call Selling a call without long stock: pure short premium with theoretically unlimited risk if the stock surges. Basic · bullish Naked Put Selling a put without a cash-secured framework still collects premium but retains large downside if the stock gaps lower.

Spreads strategies

Spreads · bullish Bull Call Spread Debit vertical: buy a lower-strike call and sell a higher-strike call. Bullish with defined risk and defined reward. Spreads · bearish Bear Put Spread Debit vertical: buy a higher-strike put and sell a lower-strike put. Bearish defined-risk structure. Spreads · bullish Bull Put Credit Spread Credit vertical: sell a higher-strike put and buy a lower-strike put. Bullish/neutral income with defined risk. Spreads · bearish Bear Call Credit Spread Credit vertical: sell a lower-strike call and buy a higher-strike call. Bearish/neutral defined-risk short premium. Spreads · volatile Call Ratio Back Spread Sell fewer lower-strike calls and buy more higher-strike calls — a volatile, bullish structure that can profit from large upside. Spreads · volatile Put Ratio Back Spread Sell fewer higher-strike puts and buy more lower-strike puts — seeks profit from a sharp decline. Spreads · neutral Call Calendar Spread Sell a near-term call and buy a longer-dated call at the same strike — profits if price stays near the strike into front-month expiry and vol/time dynamics cooperate. Spreads · neutral Put Calendar Spread Put calendar: short near-term put + long longer-dated put, same strike. Neutral pin-style structure with multi-expiry complexity. Spreads · bullish Call Diagonal Spread A call diagonal mixes calendar timing with different strikes — often long lower-strike longer call and short higher-strike nearer call (bullish lean). Spreads · bearish Put Diagonal Spread Put diagonal with mixed strikes/expiries — often a bearish financing structure analogous to the call diagonal.

Advanced strategies

Advanced · neutral Iron Condor Four-leg short premium: put credit spread + call credit spread. Profits if price stays between short strikes; defined risk via long wings. Advanced · neutral Iron Butterfly Short ATM straddle hedged with long OTM wings — max profit if price pins the body strike; tighter profit zone than a condor. Advanced · neutral Call Butterfly Long call butterfly: buy 1 low strike, sell 2 middle, buy 1 high — limited risk, max profit if price lands near the body at expiry. Advanced · bullish Collar Protective collar: long stock + long put + short call. Floors downside while financing the put by capping upside. Advanced · volatile Long Straddle Buy ATM call and put — profits from a large move either way; loses if the stock chops and IV falls. Advanced · neutral Short Straddle Sell ATM call and put — max profit if price stays near the strike; risk is large on a breakout either way. Advanced · volatile Long Strangle Buy OTM call and OTM put — cheaper than a straddle but needs a larger move to profit at expiration. Advanced · neutral Short Strangle Sell OTM call and OTM put for a credit — profits if price stays between strikes; undefined risk without wings. Advanced · bullish Covered Strangle Long stock + short OTM call + short OTM put — income-focused, bullish-leaning, with elevated downside versus a plain covered call. Advanced · bullish Synthetic Long Stock Long call + short put at the same strike mimics long stock payoff with different capital/margin profile.

Custom strategies

Custom · custom Custom 2 Legs A blank two-leg canvas for any vertical, straddle, risk reversal, or synthetic you define yourself. Custom · custom Custom 3 Legs Three-leg builder for butterflies, ratio spreads, and other non-standard shapes. Custom · custom Custom 4 Legs Four-leg builder ideal for iron condors, iron flies, and double diagonals. Custom · custom Custom 6 Legs Six-leg flexibility for advanced overlays and multi-strike constructions. Custom · custom Custom 8 Legs Maximum multi-leg canvas for complex books of options on one underlying.

How to use these lessons

  1. Read the construction and risk snapshot.
  2. Open the linked calculator with realistic premiums from the chain.
  3. Change strikes and DTE on the heatmap until the risk matches your thesis.
  4. Review risk management before sizing a live trade.

Educational content only — not financial advice. Options involve substantial risk of loss.