Back to Information Home

4 Basic Option Trades

Glossary

Every options trade or strategy, no matter how simple or complex, involves one or more of these types of trades:

-Buying a call (Long Call)

-Buying a put (Long Put)

-Selling a call (Short Call or alternatively a Covered Call)

-Selling a put (Short Put or alternatively a Cash Secured Put)

 

Any 2 or more of these strategies can be combined in order to create a more complex strategy. For example: a long call and a short call be used in conjunction to create a (bullish) call debit spread or a (bearish) call credit spread.

A call and put can both be longed or shorted in a variety of different ways to create strategies of varying sentiment. For example: shorting a call and longing a put would result in a (bearish) synthetic short while shorting a put and longing a call would create a (bullish) synthetic long.

 

Different types of options strategies carry different types of risk. Make sure you understand your chosen strategy's risk profile: some strategies have a theoretical infinite loss.

 

Relevant Resources:
Unusual Whales Options Strategy listing

 

Options Profit Calculator

 

Unusual Whales Paper Trading