Can you explain each multi-leg option strategy?

Strategy

Explanation

Vertical

A vertical spread involves buying and selling two options of the same underlying security, same type (call or put),same expiration date, yet different strike prices.

Straddle

A straddle involves simultaneously buying or selling both a call option and a put option of the same underlying security, same expiration date, and same strike price.

Strangle

A strangle involves simultaneously buying or selling both a call option and a put option of the same underlying security, same expiration date, yet different strike prices.

Calendar Spread

A calendar spread involves buying and selling two options of the same underlying security, same type (call or put), same strike prices, yet different expiration dates.

Butterfly

A butterfly involves simultaneously holding three options with different strike prices in a ratio of 1:2:1. The three strike prices are equally spaced and have the same direction (call or put). These options have the same expiration date and underlying security.

Condor

A condor involves simultaneously holding four options with different strike prices in a ratio of 1:1:1:1. The four strike prices are equally spaced and have the same direction (call or put). These options have the same expiration date and underlying security.

Iron Butterfly

An iron butterfly involves holding two call options and two put options, with one call option having the same strike price as one put option, in a ratio of 1:1:1:1. The price interval between corresponding strike prices is equal, and all four options have the same expiration date and underlying security.

Iron Condor

An iron condor involves simultaneously holding two call options and two put options, in a ratio of 1:1:1:1, with equal price interval between corresponding strike prices. All four options have the same underlying asset and expiration date.

Custom

Build your own strategy by choosing multiple option legs and the side of each leg!