Stock Option Strategies

There are two main uses for stock options: hedging and speculation.


Hedging is done to limit potential losses on a stock investment. There are two commonly used methods of hedging: Covered Calls and Protective Puts


Speculation is done using stock option spreads. A stock option spread is establish when stock options are bought and sold simultaneously with the same underlying stock (equity).  Option spreads are generally very risky investments, and are certainly not recommended for beginning investors. This website can show you the basic strategies used for stock option spreads, but we suggest doing a great deal of research before you begin to trade your own option spreads. We also suggest visiting for a more thorough discussion of stock option spreads.

There are three general classes of option spreads:
Bullish - Betting the stock goes up.
Bearish - Betting the stock goes down.
Neutral - Betting on stock volatility (or lack thereof).


Long Calls Naked Calls Calendar Spread
Naked Puts Long Puts Straddle Spread
Bull Call Spread Bear Call Spread Strangle Spread
Bull Put Spread Bear Put Spread Butterfly Spread
Condor Spread