At Webull, we provide a range of options strategies tailored to your investment objectives. To view the available strategies, please click here. Below is a brief overview of each strategy, including maximum gain, maximum loss, breakeven values, and the required options level for trading: Covered Calls and Puts Involves writing a call or put option while holding a corresponding long or short position in the underlying stock. This options strategy requires options level 1.
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Single-leg Option A straightforward strategy that involves either buying or selling a single option contract, such as a call or a put. This strategy requires options level 2.
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Protective Calls and Puts Protective Call A strategy where an investor holds a short position in a stock and buys a call option on the same stock. This strategy is used to hedge against potential price increases and limit the cost of buying back the stock if it rises significantly. This options strategy requires options level 2.
Protective Put A strategy where an investor holds a long position in a stock and buys a put option on the same stock. This strategy is used to hedge against potential price decreases and limit potential losses. This options strategy requires options level 2.
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Collar Involves holding the underlying stock while buying a protective put and selling a call. This strategy is used to protect against significant losses while limiting potential gains. This options strategy requires options level 2.
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Straddle A neutral strategy that involves buying or selling both a call and a put with the same strike price and expiration date. This options strategy requires a margin account with options level 2.
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Strangle Similar to a straddle but with different strike prices for the call and put. Used to profit from significant price movement. This options strategy requires a margin account with options level 2.
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Vertical Spread Credit Spread A strategy involving the simultaneous sale of one option and the purchase of another option of the same type (calls or puts) with the same expiration date but different strike prices. This strategy is designed to limit both potential gains and losses. This strategy requires options level 3.
Debit Spread A strategy involving the simultaneous purchase of one option and the sale of another option of the same type (calls or puts) with the same expiration date but different strike prices. This strategy is used to limit both potential gains and losses while incurring an upfront cost. This strategy requires options level 3.
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Calendar Spread Credit Spread A strategy involving the sale of a short-term option and the simultaneous purchase of a longer-term option of the same type (calls or puts) with the same strike price. This strategy benefits from the time decay of the shorter-term option while holding a longer-term option. This strategy requires options level 3.
Debit Spread A strategy involving the simultaneous purchase of a longer-term option and the sale of a shorter-term option of the same type (calls or puts) with the same strike price. This strategy is designed to profit from the time decay of the shorter-term option while maintaining a longer-term position. This strategy requires options level 3.
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Iron Butterfly Combines two calls and two puts with three different strike prices, seeking to profit from low volatility. This options strategy requires options level 3.
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Butterfly Combines three options of the same type (calls or puts) in a 1-2-1 ratio with different strike prices, aiming to profit from low volatility. This options strategy requires options level 3.
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Condor Spread A non-directional strategy that utilizes four call options or four put options with varying strike prices. This approach aims to profit from stability in the underlying asset. This strategy requires options level 3.
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Iron Condor Combines two calls and two puts with four different strike prices, aiming to profit from price stability within a range. This options strategy requires options level 3.
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Ratio Spread A ratio spread is a neutral options strategy where an investor maintains an unequal number of long and short options, typically with more short positions than long ones. The most common setup features a 2:1 ratio, meaning there are twice as many short options as long. Although it shares similarities with other spread strategies that involve both long and short positions of the same type (either puts or calls), the key difference is the unequal ratio between the two. To learn more, please visit trading ratio spreads. |
Naked Put A strategy where an investor sells a put option without holding the underlying stock or having any offsetting positions. This approach is also known as an uncovered put and involves substantial risk, as there is no protection against adverse price movements. This options strategy requires options level 4.
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Naked Call A strategy where an investor sells a call option without holding the underlying stock or having any other offsetting positions. This strategy is also known as an uncovered call and involves significant risk since it lacks any protective positions. This options strategy requires options level 4.
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Option trading entails significant risk and is not appropriate for all investors. Option investors can rapidly lose the entire value of their investment in a short period of time and incur permanent loss by expiration date. You need to complete an options trading application and get approval on eligible accounts. Please read the Characteristics and Risks of Standardized Options and Option Spread Risk Disclosure before trading options. |