Types of Options Trades
Every options position is built from one or more legs, each leg being a call, put, or position in the underlying. Combine them differently and you get completely different risk profiles.
The trade you pick depends on three questions:
- Direction: do you think the underlying is going up, down, or staying flat?
- Volatility: do you think the actual move will be bigger or smaller than what's priced in?
- Risk appetite: do you want defined risk (pay upfront, sleep at night) or are you comfortable with open-ended exposure in exchange for collecting premium?
Below is every common structure, organized by the thesis behind it. Click any card for a deep dive with an interactive payoff chart, Greeks breakdown, and crypto-specific considerations.
Directional
The simplest trades. You're betting on which way the underlying moves. Pay a premium, cap your downside, and profit if you're right by enough to cover the cost.
Income / Covered
You want to get paid now. These trades collect premium in exchange for capping your upside or accepting the obligation to buy at a lower price. They work best when the underlying grinds sideways or drifts slowly in your direction.
Vertical Spreads
Two options of the same type, same expiry, different strikes. Verticals cap both your risk and your reward. Four flavors depending on direction and whether you pay or collect net premium. Read the full overview →
Straddles and Strangles
You have a view on volatility, not direction. These trades profit from big moves (long) or the lack thereof (short). Read the full overview →
Multi-Leg Strategies
These combine simpler structures into more complex positions. Iron condors and butterflies are built from vertical spreads. Calendar spreads trade term structure. Risk reversals and collars combine puts and calls for synthetic exposure.
Advanced Structures
Combinations of simpler pieces for specific edge cases: synthetic financing, asymmetric risk profiles, skew expression, or capital efficiency. Read the full overview →
Quick Reference
Related:
- Lesson 7: Basic Strategies - Walkthrough for beginners
- Implied Volatility - The input that drives all option pricing
- The Greeks - How each trade's risk profile changes in real time