Options Strategy Guide: 31 Strategies with Payoff Charts

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Table of Contents

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Bullish Strategies

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1. Covered Call
2. Long Call Vertical Spread
3. Call Zebra
4. Poor Man’s Covered Call
5. Call Calendar Spread
6. Call Butterfly
7. Big Lizard

Bearish Strategies

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8. Covered Put
9. Long Put Vertical Spread
10. Put Zebra
11. Poor Man’s Covered Put
12. Put Calendar Spread
13. Put Butterfly
14. Reverse Big Lizard

Omnidirectional Strategies

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15. Put Front-Ratio Spread
16. Call Front-Ratio Spread
17. Put Broken Wing Butterfly
18. Call Broken Wing Butterfly
19. Call Broken Heart Butterfly
20. Put Broken Heart Butterfly

Neutral Strategies

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21. Short Strangle
22. Short Straddle
23. Iron Condor
24. Dynamic Width Iron Condor
25. Iron Fly

Neutral-Bullish Strategies

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26. Short Naked Put
27. Short Put Vertical Spread
28. Jade Lizard

Neutral-Bearish Strategies

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29. Short Naked Call
30. Short Call Vertical Spread
31. Reverse Jade Lizard

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Bullish Strategies

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1. Covered Call

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Own 100 shares, sell an ATM/OTM call against them to reduce cost basis. The call is “covered” by your shares. You collect premium upfront and lower your breakeven price. Profits are capped at the short call strike.

Parameter	Value
Directional Bias	Bullish
IV Environment	High
DTE at Entry	~45
Probability of Profit	50%–70%
Max Profit	(Short call − stock purchase + credit) × 100
Max Loss	Stock goes to zero (minus credit)
Profit Target	50% of max profit
Breakeven	Stock purchase price − credit

Setup — XYZ at $100: Buy 100 shares + Sell 105 call for $2.00 credit

$$\text{Max Profit} = \$700 \quad \text{Breakeven} = \$98 \quad \text{Profit Target} = 50\%$$

Key rules: Roll the short call out-and-up if it goes ITM and you want to keep shares. Never roll below your breakeven. Only sell covered calls on stocks you’re happy holding through a dip.

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2. Long Call Vertical Spread

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Buy an ITM call, sell an OTM call at the same expiration. You pay a net debit. You need the stock to rise above your long call strike to profit. The short call caps your gains but lowers your cost.

Parameter	Value
Directional Bias	Bullish
IV Environment	Any
DTE at Entry	~45
Probability of Profit	40%–60%
Max Profit	(Spread width − debit) × 100
Max Loss	Debit paid
Profit Target	50% of max profit
Breakeven	Long call strike + debit

Setup — XYZ at $100: Buy 95 call / Sell 105 call for $5.00 debit

$$\text{Max Profit} = \$500 \quad \text{Max Loss} = -\$500 \quad \text{Breakeven} = \$100$$

Key rules: Don’t extend duration by rolling out — you’d pay another debit. Can roll the short call down to reduce net debit but don’t cross your breakeven. Close if partially ITM at expiration.

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3. Call Zebra

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Buy 2 ITM calls + Sell 1 ATM call, set up with zero extrinsic value. Achieves ~100 long deltas (like owning 100 shares) with losses capped at the debit paid below the long call strikes. Acts like a married put.

Parameter	Value
Directional Bias	Bullish
IV Environment	Any
DTE at Entry	Any
Probability of Profit	~50%
Max Profit	Unlimited
Max Loss	Debit paid
Profit Target	25% of debit paid
Breakeven	Short call strike + extrinsic paid

Setup — XYZ at $100: Buy 2× 95 call + Sell 1× 100 call for $3.00 debit (zero extrinsic)

$$\text{Max Profit} = \text{Unlimited} \quad \text{Max Loss} = -\$300 \quad \text{Breakeven} \approx \$100$$

Key rules: Zero extrinsic on entry is critical — any extrinsic paid shifts your breakeven higher. Long-term/high-IV products are more expensive. You still need the stock to move in your favor.

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4. Poor Man’s Covered Call

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Buy an ITM long-term call (replicates 100 shares) and sell an OTM near-term call against it to reduce cost basis. Works like a covered call without needing to buy 100 shares. Debit paid should not exceed the spread width.

Parameter	Value
Directional Bias	Bullish
IV Environment	Low
DTE at Entry	45–60 (short leg)
Probability of Profit	50%–60%
Max Profit	Spread width − debit + remaining extrinsic in long
Max Loss	Debit paid
Profit Target	50% of estimated max profit
Breakeven	Long call strike + debit

Setup — XYZ at $100: Buy 90 call (long-term) + Sell 105 call (near-term) for $8.00 debit

$$\text{Max Profit} \approx \$700 \quad \text{Max Loss} = -\$800 \quad \text{Breakeven} = \$98$$

Key rules: Debit paid must be ≤ 75% of the spread width — if you pay more and the spread goes ITM, you can lose money as both options trade with pure intrinsic value. Best used in low-IV environments where back-month calls are cheap.

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5. Call Calendar Spread

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Buy a call in a long-term expiration and sell the same strike call in a near-term expiration. Profits when the stock stays near the strike and IV expands. Short call decays faster than long call.

Parameter	Value
Directional Bias	Slightly bullish
IV Environment	Low (enter cheap, want IV to expand)
DTE at Entry	~45 (short leg)
Probability of Profit	Variable (N/A)
Max Profit	Variable
Max Loss	Debit paid
Profit Target	10–25% of debit
Breakeven	Variable

Setup — XYZ at $100: Buy 105 call (back month) + Sell 105 call (front month) for $2.00 debit

Key rules: This is an extrinsic value trade — both legs moving far ITM or OTM results in loss. Enter in low IV, exit quickly when you see profitability near your strike. Temper profit target to 10–25% of debit.

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6. Call Butterfly

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Symmetrical structure: Buy ATM call + Sell 2 equidistant OTM calls + Buy further OTM call. Profit zone is narrow — stock must be near the short strikes at expiration. Low probability, so prefer to roll into this from a broken wing butterfly.

Parameter	Value
Directional Bias	Bullish
IV Environment	Any
DTE at Entry	15–45
Probability of Profit	20%–40%
Max Profit	(Long spread width − debit) × 100
Max Loss	Debit paid
Profit Target	25% of long spread width
Breakeven	Long call strike + debit

Setup — XYZ at $100: Buy 100 call + Sell 2× 105 call + Buy 110 call for $1.50 debit

$$\text{Max Profit} = \$350 \quad \text{Max Loss} = -\$150 \quad \text{Profit Zone: \$101.50–\$108.50}$$

Key rules: Close before expiration if partially ITM — assignment risk. Less time to expiry = more P&L movement. Too much extrinsic early on prevents meaningful movement.

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7. Big Lizard

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Sell an ATM short put combined with an ATM short call spread, same short strike. Total credit must exceed the call spread width to eliminate all upside risk. Naked put is the risk — stock going to zero is the worst case.

Parameter	Value
Directional Bias	Bullish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	(Short put strike × 100) − credit
Profit Target	25% of max profit
Breakeven	Short put strike − credit

Setup — XYZ at $100: Sell 100 put + Sell 100/105 call spread for $6.00 total credit

$$\text{Max Profit} = \$600 \quad \text{Breakeven} = \$94 \quad \text{No upside risk if credit} > \text{call spread width}$$

Key rules: Always ensure credit received > width of call spread. One side always ITM so temper profit target to 25%. Roll naked put out in time if approaching expiration ITM.

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Bearish Strategies

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8. Covered Put

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Short 100 shares + sell an ATM/OTM put against the position to improve short cost basis. The put is “covered” by your short shares. Premium collected reduces your effective breakeven on the short.

Parameter	Value
Directional Bias	Bearish
IV Environment	High
DTE at Entry	~45
Probability of Profit	50%–70%
Max Profit	(Short price − short put strike + credit) × 100
Max Loss	Unlimited (stock can rally)
Profit Target	50% of max profit
Breakeven	Short stock price + credit

Setup — XYZ at $100: Short 100 shares + Sell 95 put for $2.00 credit

$$\text{Max Profit} = \$700 \quad \text{Breakeven} = \$102 \quad \text{Max Loss} = \text{Unlimited}$$

Key rules: Roll put out-and-down to continue reducing cost basis. Never roll above your breakeven. The put assignment at expiration delivers 100 shares — which offsets your short position for max profit.

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9. Long Put Vertical Spread

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Buy an ITM put, sell an OTM put at the same expiration. Pay a net debit. Need the stock to fall below the long put strike to profit. Short put caps gains but reduces the cost.

Parameter	Value
Directional Bias	Bearish
IV Environment	Any
DTE at Entry	~45
Probability of Profit	50%–60%
Max Profit	(Spread width − debit) × 100
Max Loss	Debit paid
Profit Target	50% of max profit
Breakeven	Long put strike − debit

Setup — XYZ at $100: Buy 105 put / Sell 95 put for $5.00 debit

$$\text{Max Profit} = \$500 \quad \text{Max Loss} = -\$500 \quad \text{Breakeven} = \$100$$

Key rules: Don’t roll out in time — you’d pay another debit. Can roll short put up to reduce net debit (but not above breakeven). Close if partially ITM at expiration to avoid unwanted short shares.

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10. Put Zebra

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Buy 2 ITM puts + Sell 1 ATM put, set up with zero extrinsic value. Achieves ~100 short deltas (like being short 100 shares) with losses capped at the debit paid above the long put strikes. Acts like a married call.

Parameter	Value
Directional Bias	Bearish
IV Environment	Any
DTE at Entry	Any
Probability of Profit	~50%
Max Profit	Unlimited (stock falls)
Max Loss	Debit paid
Profit Target	25% of debit paid
Breakeven	Short put strike − extrinsic paid

Setup — XYZ at $100: Buy 2× 105 put + Sell 1× 100 put for $3.00 debit (zero extrinsic)

$$\text{Max Profit} = \text{Unlimited} \quad \text{Max Loss} = -\$300 \quad \text{Breakeven} \approx \$100$$

Key rules: Zero extrinsic on entry is critical. Roll short put up if stock rallies (reduces debit + delta). Close before expiration to avoid complex assignment scenarios.

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11. Poor Man’s Covered Put

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Buy an ITM long-term put (replicates short stock position) and sell an OTM near-term put to reduce cost basis. Bearish equivalent of the Poor Man’s Covered Call. Debit paid should not exceed the spread width.

Parameter	Value
Directional Bias	Bearish
IV Environment	Low
DTE at Entry	45–60 (short leg)
Probability of Profit	50%–60%
Max Profit	Spread width − debit + remaining extrinsic in long
Max Loss	Debit paid
Profit Target	50% of estimated max profit
Breakeven	Long put strike − debit

Setup — XYZ at $100: Buy 110 put (long-term) + Sell 95 put (near-term) for $8.00 debit

$$\text{Max Profit} \approx \$700 \quad \text{Max Loss} = -\$800 \quad \text{Breakeven} = \$102$$

Key rules: Debit ≤ 75% of spread width. Roll short put out in time to keep reducing cost basis. Enter in low-IV environments — cheap back-month puts are key to making this work.

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12. Put Calendar Spread

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Buy a put in a long-term expiration and sell the same strike put in a near-term expiration. Profits when the stock stays near the strike and IV expands. Mirror of the Call Calendar but on the put side.

Parameter	Value
Directional Bias	Slightly bearish
IV Environment	Low
DTE at Entry	~45 (short leg)
Probability of Profit	Variable (N/A)
Max Profit	Variable
Max Loss	Debit paid
Profit Target	10–25% of debit
Breakeven	Variable

Setup — XYZ at $100: Buy 95 put (back month) + Sell 95 put (front month) for $1.50 debit

Key rules: Extrinsic value trade — stock moving far from the strike in either direction = loss. Enter low IV, target quick exit when profitable near your strike. Roll the short put out if it loses value quickly.

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13. Put Butterfly

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Buy ATM put + Sell 2 equidistant OTM puts + Buy further OTM put. Narrow profit zone — stock must be near the short strikes at expiration. Low probability. Better to roll into this from a put broken wing butterfly.

Parameter	Value
Directional Bias	Bearish
IV Environment	Any
DTE at Entry	15–45
Probability of Profit	20%–40%
Max Profit	(Long spread width − debit) × 100
Max Loss	Debit paid
Profit Target	25% of long spread width
Breakeven	Long put strike − debit

Setup — XYZ at $100: Buy 100 put + Sell 2× 95 put + Buy 90 put for $1.50 debit

$$\text{Max Profit} = \$350 \quad \text{Max Loss} = -\$150 \quad \text{Profit Zone: \$91.50–\$98.50}$$

Key rules: Close before expiration if partially ITM — assignment risk on short puts. Less time = more P&L potential as stock moves through strikes. Prefer rolling into equidistant butterflies from BWBs.

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14. Reverse Big Lizard

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Sell an ATM short call combined with an ATM short put spread, same short strike. Total credit must exceed the put spread width to eliminate all downside risk. Naked call is the risk — unlimited upside exposure.

Parameter	Value
Directional Bias	Bearish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Unlimited (naked call)
Profit Target	25% of max profit
Breakeven	Short call strike + credit

Setup — XYZ at $100: Sell 100 call + Sell 100/95 put spread for $6.00 total credit

$$\text{Max Profit} = \$600 \quad \text{Breakeven} = \$106 \quad \text{No downside risk if credit} > \text{put spread width}$$

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Omnidirectional Strategies

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15. Put Front-Ratio Spread

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Buy one OTM put + Sell two further OTM puts for a net credit. No risk to the upside (stock rallies = keep credit). Max profit at the short put strikes. Undefined risk if the stock falls well below the breakeven. Also called a put ratio spread.

Parameter	Value
Directional Bias	Omnidirectional
IV Environment	High
DTE at Entry	15–45
Probability of Profit	60%–80%
Max Profit	(Spread width + credit) × 100
Max Loss	Undefined (below breakeven)
Profit Target	50% of credit or 25% of spread width
Breakeven	Short put strike − (spread width + credit)

Setup — XYZ at $100: Buy 95 put + Sell 2× 90 put for $0.50 credit

$$\text{Max Profit} = \$550 \text{ (at \$90)} \quad \text{Breakeven} = \$84.50 \quad \text{Keep } \$50 \text{ credit if stock above \$95}$$

Key rules: Roll the naked put out in time if the stock falls through your profit zone. Can close the long put spread for credit to further reduce risk on the remaining naked put. Hold closer to expiration so extrinsic value decays before reaching your profit zone.

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16. Call Front-Ratio Spread

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Buy one OTM call + Sell two further OTM calls for a net credit. No risk to the downside (stock falls = keep credit). Max profit at the short call strikes. Undefined risk if the stock rallies well above the breakeven. Also called a call ratio spread.

Parameter	Value
Directional Bias	Omnidirectional
IV Environment	High
DTE at Entry	15–45
Probability of Profit	60%–80%
Max Profit	(Spread width + credit) × 100
Max Loss	Unlimited (above breakeven)
Profit Target	50% of credit or 25% of spread width
Breakeven	Short call strike + (spread width + credit)

Setup — XYZ at $100: Buy 105 call + Sell 2× 110 call for $0.50 credit

$$\text{Max Profit} = \$550 \text{ (at \$110)} \quad \text{Breakeven} = \$115.50 \quad \text{Keep } \$50 \text{ credit if stock below \$105}$$

Key rules: Roll the naked call out in time if the stock rallies through your profit zone. Can close the long call spread for credit. Hold closer to expiration for extrinsic value to decay before entering your profit zone.

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17. Put Broken Wing Butterfly

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Long narrow put spread + Short wider put spread at the same expiration = net credit. Asymmetry (wider short spread) removes all upside risk. Max profit at the short put strikes. Defined max loss if stock falls all the way through.

Parameter	Value
Directional Bias	Omnidirectional (bearish lean)
IV Environment	High
DTE at Entry	15–45
Probability of Profit	60%–80%
Max Profit	(Long spread width + credit) × 100
Max Loss	(Short spread − long spread − credit) × 100
Profit Target	50% of credit or 25% of long spread width
Breakeven	Short put strike − (long spread width + credit)

Setup — XYZ at $100: Buy 100/97P spread + Sell 97/91P spread for $0.50 credit

$$\text{Max Profit} = \$350 \quad \text{Max Loss} = -\$250 \quad \text{No upside risk (keep \$50 credit if stock rises)}$$

Key rules: Frequently used in products with put skew — collect more credit or make spreads wider. BWBs don’t appreciate much until close to expiration (extrinsic must decay). Initial goal: roll into symmetrical butterfly if spreads move OTM (lock in small profit, remove risk).

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18. Call Broken Wing Butterfly

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Long narrow call spread + Short wider call spread at the same expiration = net credit. Asymmetry removes all downside risk. Max profit at the short call strikes. Defined max loss if stock rallies all the way through.

Parameter	Value
Directional Bias	Omnidirectional (bullish lean)
IV Environment	High
DTE at Entry	15–45
Probability of Profit	60%–80%
Max Profit	(Long spread width + credit) × 100
Max Loss	(Short spread − long spread − credit) × 100
Profit Target	50% of credit or 25% of long spread width
Breakeven	Short call strike + (long spread width + credit)

Setup — XYZ at $100: Buy 100/103C spread + Sell 103/109C spread for $0.50 credit

$$\text{Max Profit} = \$350 \quad \text{Max Loss} = -\$250 \quad \text{No downside risk (keep \$50 credit if stock falls)}$$

Key rules: Best in products with call skew. Roll into symmetrical butterfly if spreads move OTM — if debit < initial credit, lock in small profit. Hold closer to expiration for extrinsic to decay.

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19. Call Broken Heart Butterfly

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A disconnected Call Broken Wing Butterfly where the long and short call spreads are separated by a gap. That gap is the profit zone — wide exposure to the upside. Still collected for a credit, still no downside risk. You give up almost all of the credit to create the gap.

Parameter	Value
Directional Bias	Omnidirectional (bullish lean)
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	(Long spread width + credit) × 100
Max Loss	(Short spread − long spread − credit) × 100
Profit Target	25%–50% of long spread width
Breakeven	Short call strike + long spread width + credit

Setup — XYZ at $100: Buy 102/104C + Sell 110/114C for $0.50 credit (6-point gap between spreads)

$$\text{Max Profit} = \$250 \quad \text{Max Loss} = -\$150 \quad \text{Profit Zone: \$104–\$110 (the gap)}$$

Key rules: Call skew maximizes this trade — wider gap, same credit. Need directional move + time. Hold closer to expiration. Defensive: sell long spread for profit, roll short spread out in time.

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20. Put Broken Heart Butterfly

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A disconnected Put Broken Wing Butterfly where the long and short put spreads are separated by a gap to the downside. That gap is the profit zone. Collected for a credit, no upside risk. Mirror of the Call Broken Heart but on the put side.

Parameter	Value
Directional Bias	Omnidirectional (bearish lean)
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	(Long spread width + credit) × 100
Max Loss	(Short spread − long spread − credit) × 100
Profit Target	25%–50% of long spread width
Breakeven	Short put strike − long spread width − credit

Setup — XYZ at $100: Buy 98/96P + Sell 90/86P for $0.50 credit (6-point gap between spreads)

$$\text{Max Profit} = \$250 \quad \text{Max Loss} = -\$150 \quad \text{Profit Zone: \$86–\$96 (the gap)}$$

Key rules: Put skew maximizes this trade — wider gap, same credit. Defensive: sell long spread for profit, convert short put spread into iron condor or jade lizard. Need the directional move plus time decay.

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Neutral Strategies

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21. Short Strangle

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Sell an OTM put and an OTM call at the same expiration. You want the stock to stay between your strikes so both options expire worthless and you keep the credit. Undefined risk on both sides — the short put hedges the short call and vice versa.

Parameter	Value
Directional Bias	Neutral
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Unlimited
Profit Target	50% of max profit
Breakeven	Put strike − credit / Call strike + credit

Setup — XYZ at $100: Sell 90 put + Sell 110 call

$$\text{Max Profit} = \text{Credit} \quad \text{Max Loss} = \text{Unlimited} \quad \text{Breakevens} = \$88 / \$112$$

Key rules: Trade small so you can roll. If tested, roll the untested side toward the tested side to collect more credit and reduce delta. Can also roll both strikes out in time. Being tested is normal — manage it, don’t panic.

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22. Short Straddle

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Sell an ATM put and ATM call at the same strike and expiration. You collect a large credit because both options are at-the-money. One strike will always be ITM at expiration — this is not a set-and-forget trade. Strong vega exposure makes IV changes very impactful.

Parameter	Value
Directional Bias	Neutral
IV Environment	High
DTE at Entry	~45
Probability of Profit	50%–60%
Max Profit	Credit received
Max Loss	Unlimited
Profit Target	25% of max profit
Breakeven	Strike − credit / Strike + credit

Setup — XYZ at $100: Sell 100 put + Sell 100 call for ~$10.00 credit

$$\text{Max Profit} = \$1{,}000 \quad \text{Max Loss} = \text{Unlimited} \quad \text{Breakevens} = \$90 / \$110$$

Key rules: Reserve for high IV and high IVR environments — credit must be large enough to make breakevens meaningful. Always close or roll before expiration (one leg always ITM). If tested, roll the untested side past the tested side (inversion) to add credit.

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23. Iron Condor

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Sell an OTM put spread and sell an OTM call spread at the same expiration. You want the stock to stay between your short strikes so both spreads expire worthless. Collect around 1/3rd the width of the strikes. Limited defensive management — wide profit range up front is your best defense.

Parameter	Value
Directional Bias	Neutral
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Widest spread width − credit
Profit Target	50% of max profit
Breakeven	Short put strike − credit / Short call strike + credit

Setup — XYZ at $100: Sell 95/92 put spread + Sell 105/108 call spread for $1.00 credit

$$\text{Max Profit} = \$100 \quad \text{Max Loss} = -\$200 \quad \text{Breakevens} = \$94 / \$106$$

Key rules: Be mindful of liquidity — 4 legs means more slippage. Select strikes for a wide profit range while still collecting ~1/3 the spread width. If tested, roll the tested spread out in time or close/roll the untested side to reduce max loss. Close ITM spreads before expiration to avoid assignment.

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24. Dynamic Width Iron Condor

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Same structure as a standard iron condor but the put spread and call spread have different widths, set so that the short option deltas match and the long option deltas match. This accounts for market skew — when OTM puts are more expensive than equidistant OTM calls, the put spread will be wider.

Parameter	Value
Directional Bias	Neutral
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Widest spread width − credit
Profit Target	50% of max profit
Breakeven	Short put strike − credit / Short call strike + credit

Setup — XYZ at $100: Sell 97/90 put spread (7 wide) + Sell 107/110 call spread (3 wide) for $2.00 credit

$$\text{Max Profit} = \$200 \quad \text{Max Loss} = -\$500 \quad \text{Breakevens} = \$95 / \$109$$

Key rules: Strike selection — match the short deltas on both sides, then match the long deltas. This creates a skew-balanced position. The wider put spread will always have more risk when there’s put skew in the market. Defensive management mirrors standard iron condor.

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25. Iron Fly

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Sell an ATM straddle and buy OTM put and call protection to define risk. Essentially a defined-risk straddle. Collects a very large credit but the profit zone is narrower than an iron condor. One leg always ITM at expiration — must close or roll before expiration.

Parameter	Value
Directional Bias	Neutral
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Widest spread width − credit
Profit Target	25% of max profit
Breakeven	Short put strike − credit / Short call strike + credit

Setup — XYZ at $100: Sell 100/90 put spread + Sell 100/110 call spread for $5.00 credit

$$\text{Max Profit} = \$500 \quad \text{Max Loss} = -\$500 \quad \text{Breakevens} = \$95 / \$105$$

Key rules: Target 1:1 risk/reward so the spread widths are practical. Defensive management is limited vs. undefined-risk straddle — if one side is fully ITM, you can’t roll for a credit without adding risk. Close early when you hit 25% profit target. Always close or roll before expiration — one leg is always ITM.

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Neutral-Bullish Strategies

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26. Short Naked Put

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Sell an OTM put — you’re betting against the stock moving below your strike by expiration. Profitable if the stock stays the same, goes up, or even goes down a little as long as your strike stays OTM. If assigned, you take ownership of 100 shares at the strike price, so only sell puts on stocks you’d want to own.

Parameter	Value
Directional Bias	Neutral-Bullish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Strike × 100 − credit received
Profit Target	50% of max profit
Breakeven	Put strike − credit received

Setup — XYZ at $100: Sell 95 put for $1.00 credit

$$\text{Max Profit} = \$100 \quad \text{Max Loss} = -\$9{,}400 \quad \text{Breakeven} = \$94$$

Key rules: Only sell puts on stocks you’d be comfortable owning. Roll out in time for credit if going ITM — this adds duration and lowers your breakeven. If assigned, the risk profile becomes identical to a covered call on that same strike. Many traders roll perpetually rather than take a loss.

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27. Short Put Vertical Spread

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Neutral-Bullish defined risk credit trade where we are betting against the stock moving below our short strike price by the expiration of our contract. Sell an OTM or ATM put and buy a further OTM put to define your downside risk. Spread width depends on account size and risk tolerance.

Parameter	Value
Directional Bias	Neutral-Bullish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Distance between strikes − credit
Profit Target	50% of max profit
Breakeven	Short put strike − credit received

Setup — XYZ at $100: Sell 95 put / Buy 90 put for $1.65 credit

$$\text{Max Profit} = \$165 \quad \text{Max Loss} = -\$335 \quad \text{Breakeven} = \$93.35$$

Key rules: Vertical spreads have a less volatile P&L because the long put defines risk — expect to be in this trade longer than a naked put to reach your profit target. If OTM/ATM, roll out in time for credit to reduce max loss and add duration. Close before expiration if partially ITM — if the short put is ITM and long put is OTM, you can end up with 100 long shares in the next session.

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28. Jade Lizard

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Sell an OTM put combined with an OTM call credit spread. The key feature: the total credit received must be greater than the width of the call spread — this removes upside risk entirely. You’re taking undefined downside risk via the short put, but you have no risk to the upside. Max profit realized if all options expire OTM.

Parameter	Value
Directional Bias	Neutral-Bullish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Short put strike × 100 − credit (no upside risk)
Profit Target	50% of max profit
Breakeven	Short put strike − credit received

Setup — XYZ at $100: Sell 95 put + Sell 105/110 call spread for >$5.00 credit total

$$\text{Max Profit} = \text{Credit} \quad \text{No Upside Risk} \quad \text{Breakeven} = \$95 - \text{credit}$$

Key rules: The most important rule — net credit must exceed the call spread width, otherwise you have upside risk. Aim for call spread premium around 1/3 the width. If the short put goes ITM, roll it out in time, or roll the call spread down to defend (keep net credit > call spread width). All options expiring OTM = max profit.

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Neutral-Bearish Strategies

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29. Short Naked Call

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Sell an OTM call — you’re betting against the stock moving above your strike by expiration. Profitable if the stock stays the same, goes down, or even goes up a little as long as your strike stays OTM. Unlimited upside risk — only trade on products where you have a bearish assumption or when IV is very high.

Parameter	Value
Directional Bias	Neutral-Bearish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Unlimited
Profit Target	50% of max profit
Breakeven	Call strike + credit received

Setup — XYZ at $100: Sell 105 call for $1.00 credit

$$\text{Max Profit} = \$100 \quad \text{Max Loss} = \text{Unlimited} \quad \text{Breakeven} = \$106$$

Key rules: Roll out in time for credit if going ITM — adds duration and lowers breakeven. Watch for dividend risk: if short ITM call has less extrinsic value than the expected dividend, you risk early assignment — roll out to add extrinsic value.

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30. Short Call Vertical Spread

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Neutral-Bearish defined risk credit trade where we are betting against the stock moving above our short strike price by expiration. Sell an ATM or OTM call and buy a further OTM call to define your upside risk. Spread width depends on account size and risk tolerance.

Parameter	Value
Directional Bias	Neutral-Bearish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Distance between strikes − credit
Profit Target	50% of max profit
Breakeven	Short call strike + credit received

Setup — XYZ at $100: Sell 105 call / Buy 110 call for $1.65 credit

$$\text{Max Profit} = \$165 \quad \text{Max Loss} = -\$335 \quad \text{Breakeven} = \$106.65$$

Key rules: Vertical spreads have a less volatile P&L because the long call defines risk — expect to be in the trade longer than a naked call to reach your profit target. If OTM/ATM, roll out in time for credit to reduce max loss. Close before expiration if partially ITM — if short call is ITM and long call is OTM, you can end up with 100 shares of short stock in the next session.

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31. Reverse Jade Lizard

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Sell an OTM call combined with an OTM put credit spread. The key feature: the total credit received must be greater than the width of the put spread — this removes downside risk entirely. You’re taking undefined upside risk via the short call, but you have no risk to the downside. Max profit realized if all options expire OTM.

Parameter	Value
Directional Bias	Neutral-Bearish
IV Environment	High
DTE at Entry	~45
Probability of Profit	60%–80%
Max Profit	Credit received
Max Loss	Unlimited (short call, no upside protection)
Profit Target	50% of max profit
Breakeven	Short call strike + credit received

Setup — XYZ at $100: Sell 110 call + Sell 95/90 put spread for >$5.00 credit total

$$\text{Max Profit} = \text{Credit} \quad \text{No Downside Risk} \quad \text{Breakeven} = \$110 + \text{credit}$$

Key rules: Net credit must exceed the put spread width — this is what removes downside risk. Target put spread premium around 1/3 the width. If the short call goes ITM, roll it out in time, or roll the put spread up to defend (keep net credit > put spread width). Mirror image of the Jade Lizard.

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Source: tastylive Options Strategy Guide. Part of the Options Trading reference series.