Options Strategies Lite#

"Options are about probabilities, not predictions."

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

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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

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Strategy Selector#

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

Bullish Outlook#

Your SituationStrategyStrongly bullish, want leverage, defined riskLong CallModerately bullish, want to reduce costBull Call Spread (Debit)Moderately bullish, prefer to collect premiumBull Put Spread (Credit)Happy to own the stock at a lower priceCash-Secured PutAlready own the stock, neutral to slightly upCovered CallWant stock-like exposure with less capitalLEAPS Call

Bearish Outlook#

Your SituationStrategyStrongly bearish, want leverage, defined riskLong PutModerately bearish, reduce costBear Put Spread (Debit)Moderately bearish, collect premiumBear Call Spread (Credit)Own stock, want downside protectionProtective Put

Neutral / Range-Bound Outlook#

Your SituationStrategyStock going nowhere, want to profit from itIron CondorAlready own the stock, don't expect big movesCovered CallExpect low volatility, tight rangeIron Butterfly (full version)

Unknown Direction (Volatility Play)#

Your SituationStrategyBig move expected, don't know which wayLong StraddleSame but want cheaper entryLong Strangle

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The 5 Core Strategies — Plain English#

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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

MetricValueMax Profit(Strike - stock cost) + premiumMax LossStock drops to zero (minus premium received)BreakevenYour purchase price minus premiumUpsideCapped 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.

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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)

MetricValueMax ProfitPremium receivedMax Loss(Strike - premium) × 100 if stock goes to zeroBreakevenStrike minus premiumAssignmentYou 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.

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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

MetricBull Call SpreadBear Put SpreadCostDebit (you pay)Debit (you pay)Max ProfitSpread width minus debitSpread width minus debitMax LossDebit paidDebit paidBreakevenLower strike + debitHigher 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.

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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)

MetricValueMax ProfitTotal credit receivedMax LossSpread width minus total credit (per side)Profit zoneBetween your two short strikesBreakevensShort 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.

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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

MetricValueMax ProfitEffectively unlimited (stock moves a lot in your favor)Max LossPremium paid (you can lose 100% if you're wrong)BreakevenStrike + premium paidLeverage~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.

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Quick Vocabulary#

TermPlain EnglishCall optionRight to BUY shares at the strike pricePut optionRight to SELL shares at the strike priceStrike priceThe locked-in price in the contractPremiumWhat you pay (or collect) for the optionExpirationWhen the option contract endsIn-the-money (ITM)Option has intrinsic value right nowOut-of-the-money (OTM)Option would not be profitable if expired todayAssignmentBeing forced to buy/sell stock because your option was exercisedDTEDays to expiration

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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

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Example Queries#

• "I'm bullish on AAPL — what's the best options strategy?"
• "Explain how a covered call works in plain English"
• "What's an iron condor and when should I use it?"
• "I want to own MSFT at a lower price — what should I do?"
• "What's the difference between a covered call and a cash-secured put?"
• "I think TSLA is going to move big but I don't know which way"

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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.