Options Strategies Lite

"Options are about probabilities, not predictions."

⚙️ Want Greeks management, IV rank guidance, and full adjustment playbooks?
Full version → agentofalpha.com

---

What This Skill Does

Helps you pick the right options strategy for your market outlook and explains exactly how each of the 5 most widely-used strategies works — in plain English, with P/L breakdowns.

Included in Lite:

• - ✅ Strategy selector: Tell me bullish / bearish / neutral → get the right strategy
• ✅ Plain-English breakdown of 5 core strategies
• ✅ Max profit, max loss, and breakeven for each
• ✅ Honest "best for" and "avoid when" guidance

Upgrade to Full for:

• - ❌ Greeks management (Delta, Theta, Vega — how to hedge and size)
• ❌ IV Rank guidance (when to buy vs. sell premium based on volatility environment)
• ❌ Position sizing rules (how much capital to risk per trade)
• ❌ DTE optimization (optimal days to expiration for each strategy)
• ❌ Real-world adjustment playbooks (what to do when a trade goes against you)
• ❌ Advanced strategies (butterflies, calendars, diagonals, jade lizards, BWBs)
• ❌ Exit criteria and take-profit rules

---

Strategy Selector

Tell me your outlook and I'll point you to the right strategy:

Bullish Outlook

Your Situation	Strategy
Strongly bullish, want leverage, defined risk	Long Call
Moderately bullish, want to reduce cost

Bull Call Spread (Debit) | | Moderately bullish, prefer to collect premium | Bull Put Spread (Credit) | | Happy to own the stock at a lower price | Cash-Secured Put | | Already own the stock, neutral to slightly up | Covered Call | | Want stock-like exposure with less capital | LEAPS Call |

Bearish Outlook

Your Situation	Strategy
Strongly bearish, want leverage, defined risk	Long Put
Moderately bearish, reduce cost

Bear Put Spread (Debit) | | Moderately bearish, collect premium | Bear Call Spread (Credit) | | Own stock, want downside protection | Protective Put |

Neutral / Range-Bound Outlook

Your Situation	Strategy
Stock going nowhere, want to profit from it	Iron Condor
Already own the stock, don't expect big moves

Covered Call | | Expect low volatility, tight range | Iron Butterfly (full version) |

Unknown Direction (Volatility Play)

Your Situation	Strategy
Big move expected, don't know which way	Long Straddle
Same but want cheaper entry

Long Strangle |

---

The 5 Core Strategies — Plain English

---

1. Covered Call

What it is: You own 100 shares and sell someone the right to buy them from you at a higher price. They pay you premium upfront.

The deal: You cap your upside at the strike price, but collect income whether the stock goes up, stays flat, or drops a little.

Example (stock at $100):

• - Sell 1 call at $110 strike, collect $2.50 premium
• Your income: $250 (received now, regardless of what happens)
• Max profit: $1,000 (stock appreciation from $100 to $110) + $250 premium = $1,250
• Max loss: You still own the stock — loss is whatever the stock falls minus the $250 cushion

Metric	Value
Max Profit	(Strike - stock cost) + premium
Max Loss

Stock drops to zero (minus premium received) |
| Breakeven | Your purchase price minus premium |
| Upside | Capped at strike |

Best for: Income generation on stocks you already own. Neutral to mildly bullish outlook.
Avoid when: You think the stock is about to rip higher — you'll miss the gains.

---

2. Cash-Secured Put

What it is: You sell someone the right to sell their shares TO you at a specific price. You collect premium upfront and hold cash in reserve equal to the potential purchase price.

The deal: Either you keep the premium (stock stays above strike), or you end up buying the stock at the strike — at a discount to where it was when you sold the put.

Example (stock at $100):

• - Sell 1 put at $95 strike, collect $3.00 premium
• Your income: $300 (received now)
• If stock stays above $95: keep the $300, trade done
• If stock drops to $90 at expiry: you buy 100 shares at $95 (your effective cost = $92 after premium)

Metric	Value
Max Profit	Premium received
Max Loss

(Strike - premium) × 100 if stock goes to zero |
| Breakeven | Strike minus premium |
| Assignment | You buy the stock at the strike if it closes below |

Best for: Getting paid to potentially buy a stock you want to own anyway at a lower price.
Avoid when: You don't actually want to own the stock. Assignment is real — be prepared for it.

---

3. Vertical Spread (Bull Call Spread / Bear Put Spread)

What it is: You buy one option and sell another at a different strike (same expiry). The sold option reduces your cost but caps your max profit.

Bull Call Spread Example (stock at $100, bullish):

• - Buy $100 call + Sell $110 call, same expiry
• Net cost: $3.50 (debit)
• Max profit: $10 wide spread minus $3.50 cost = $6.50 per share ($650 per contract)
• Max loss: $3.50 per share ($350 per contract) — you can never lose more than what you paid

Metric	Bull Call Spread	Bear Put Spread
Cost	Debit (you pay)	Debit (you pay)
Max Profit

Spread width minus debit | Spread width minus debit |
| Max Loss | Debit paid | Debit paid |
| Breakeven | Lower strike + debit | Higher strike minus debit |

Best for: Directional trades when you want defined risk but don't want to pay full option premium.
Advantage over long calls/puts: Much cheaper. IV crush hurts less. Breakeven is lower.
Trade-off: You cap your gains. If the stock goes to $150, you still only profit to $110.

---

4. Iron Condor

What it is: You sell an OTM call spread AND an OTM put spread on the same stock, same expiry. You collect premium from both sides and profit if the stock stays in a range.

Example (stock at $100):

• - Sell $115 call / Buy $120 call (bear call spread) = collect $1.00
• Sell $85 put / Buy $80 put (bull put spread) = collect $1.50
• Total credit: $2.50

• - You profit if stock stays between $85 and $115 at expiry
• Max profit: $250 per contract (keep all premium)
• Max loss: $250 per side ($500 max on the losing spread, minus $250 credit = $250 net max loss)

Metric	Value
Max Profit	Total credit received
Max Loss

Spread width minus total credit (per side) | | Profit zone | Between your two short strikes | | Breakevens | Short put strike minus credit AND short call strike plus credit |

Best for: Range-bound stocks during low-volatility or stable periods.
Avoid when: Big news or earnings are coming up. Binary events can blow past your wings.
Key insight: You don't need to predict direction — you just need the stock to stay in a range. That's why this is popular with income traders.

---

5. LEAPS (Long-Term Equity Anticipation Securities)

What it is: A call or put option with an expiration date 12-24 months away. Because of the long duration, these move almost like owning the stock — but at a fraction of the cost.

Example (stock at $100, very bullish):

• - Buy 1 LEAPS call, $90 strike, 18 months out, for $18.00
• Cost: $1,800 (vs. $10,000 to buy 100 shares)
• If stock goes to $140 in 18 months:

- Stock gain: $4,000 (40%)
- LEAPS gain: ~$3,200+ (option moves from $18 to ~$50) = ~175% return on the premium

Metric	Value
Max Profit	Effectively unlimited (stock moves a lot in your favor)
Max Loss

Premium paid (you can lose 100% if you're wrong) |
| Breakeven | Strike + premium paid |
| Leverage | ~5-7× leverage vs. owning stock outright |

Best for: Strong multi-month conviction plays. Capital-efficient alternative to buying 100 shares.
Avoid when: You need the stock to move quickly — LEAPS give you time, but you're paying for it.
Key risk: If the stock doesn't move much, time decay still erodes value — just slowly.

---

Quick Vocabulary

Term	Plain English
Call option	Right to BUY shares at the strike price
Put option

Right to SELL shares at the strike price |
| Strike price | The locked-in price in the contract |
| Premium | What you pay (or collect) for the option |
| Expiration | When the option contract ends |
| In-the-money (ITM) | Option has intrinsic value right now |
| Out-of-the-money (OTM) | Option would not be profitable if expired today |
| Assignment | Being forced to buy/sell stock because your option was exercised |
| DTE | Days to expiration |

---

Where the Lite Version Ends

You now know how to pick a strategy and what the basic mechanics are for the 5 most important strategies in options trading.

What you won't get here:

• - Greeks: How to read Delta (directional exposure), Theta (time decay per day), Vega (sensitivity to volatility changes) — essential for managing positions
• IV Rank guidance: The single most important factor in whether to buy or sell premium. High IV = sell premium. Low IV = buy premium. The full version scores this for you.
• Position sizing: How much capital to risk per trade (and why most people risk too much on undefined-risk strategies)
• DTE optimization: Each strategy has an optimal entry and exit window — entering too early or too late kills returns
• Adjustment playbooks: What to actually do when an iron condor gets tested, or a covered call goes deep ITM
• Advanced strategies: Calendars, diagonals, butterflies, the jade lizard, broken wing butterfly

Options edge lives in the details. The full version covers all of it.

⚙️ Want Greeks management, IV rank guidance, and full adjustment playbooks?
Full version → agentofalpha.com

---

Example Queries

• - INLINECODE0
• INLINECODE1
• INLINECODE2
• INLINECODE3
• INLINECODE4
• INLINECODE5

---

Options trading involves significant risk and is not suitable for all investors. This is educational content only — not investment advice. Always understand the full risk of a strategy before trading.