Options Strategies

Strategy ID: sell_put

Category: Income / Bullish

Description: Sell out-of-the-money put options to collect premium. Requires cash collateral equal to strike price × 100.

Entry Rules:

• Sell put option 5-10% out-of-the-money
• 30-45 days to expiration (DTE)
• Target delta: 0.20-0.30
• Collect premium: 0.5-1.0% of strike price

Exit Rules:

• Close at 50% profit
• Close at 21 DTE if not profitable
• Roll down and out if tested

Risk Management:

• Maximum loss: Strike price - Premium received
• Breakeven: Strike price - Premium
• Position size: 2-5% of portfolio per trade

Best Market Conditions: Neutral to bullish, moderate volatility

Strategy ID: sell_call

Category: Income / Neutral

Description: Own 100 shares of underlying and sell call option against it to generate income.

Entry Rules:

• Own 100 shares of underlying
• Sell call 5-10% out-of-the-money
• 30-45 days to expiration
• Target delta: 0.20-0.30

Exit Rules:

• Close at 50% profit
• Let expire if OTM
• Roll up and out if stock rallies

Risk Management:

• Maximum loss: Stock price - Premium (if stock goes to zero)
• Maximum gain: Strike - Stock price + Premium
• Caps upside potential

Strategy ID: buy_call

Category: Directional / Bullish

Description: Buy call option to profit from upward price movement with limited risk.

Entry Rules:

• Buy call when bullish signal confirmed
• At-the-money or slightly out-of-the-money
• 60-90 days to expiration
• Target delta: 0.50-0.70

Exit Rules:

• Take profit at 50-100% gain
• Stop loss at 50% of premium paid
• Close before 30 DTE to avoid theta decay

Risk Management:

• Maximum loss: Premium paid
• Maximum gain: Unlimited
• Position size: 1-3% of portfolio

Strategy ID: buy_put

Category: Directional / Bearish

Description: Buy put option to profit from downward price movement or as portfolio hedge.

Entry Rules:

• Buy put when bearish signal confirmed
• At-the-money or slightly out-of-the-money
• 60-90 days to expiration
• Target delta: -0.50 to -0.70

Exit Rules:

• Take profit at 50-100% gain
• Stop loss at 50% of premium paid
• Close before 30 DTE

Strategy ID: put_spread

Category: Spread / Bullish

Description: Sell higher strike put, buy lower strike put. Collect net credit with defined risk.

Entry Rules:

• Sell put 5-10% OTM
• Buy put 5-10% below short strike
• 30-45 DTE
• Target credit: 30-40% of spread width

Exit Rules:

• Close at 50% profit
• Close at 21 DTE if not profitable
• Stop loss at 2x credit received

Risk Management:

• Maximum loss: Spread width - Credit received
• Maximum gain: Credit received
• Breakeven: Short strike - Credit

Strategy ID: call_spread

Category: Spread / Bullish

Description: Buy lower strike call, sell higher strike call. Pay net debit with defined risk and reward.

Entry Rules:

• Buy call at-the-money or slightly OTM
• Sell call 5-10% above long strike
• 60-90 DTE

Risk Management:

• Maximum loss: Debit paid
• Maximum gain: Spread width - Debit

Strategy ID: straddle

Category: Volatility / Non-directional

Description: Buy call and put at same strike. Profits from large moves in either direction.

Entry Rules:

• Buy ATM call and put
• Same strike, same expiration
• Enter before expected volatility event
• 30-60 DTE

Exit Rules:

• Close when profit target reached (50-100%)
• Exit after volatility event
• Stop loss at 50% of premium paid

Risk Management:

• Maximum loss: Total premium paid
• Maximum gain: Unlimited (theoretically)
• Breakeven: Strike ± Total premium

Best Market Conditions: Low IV before earnings or major events

Strategy ID: strangle

Category: Volatility / Non-directional

Description: Buy OTM call and OTM put. Lower cost than straddle but requires larger move to profit.

Entry Rules:

• Buy OTM call (delta ~0.30)
• Buy OTM put (delta ~-0.30)
• Same expiration
• 30-60 DTE

Risk Management:

• Maximum loss: Total premium paid
• Lower cost than straddle
• Requires larger move to profit