Option Example Bull / Bear Max Gain Max Loss Breakeven

buy calls buy 1 xyz Oct. 50 call @ 3 bull unlimited premium strike + premium

buy puts buy 1 xyz Oct. 40 put @ 2 bear strike minus premium premium strike - premium

sell uncovered callssell 1 abc Jan. 50 call @ 4,

& do not own abcbear premium unlimited strike + premium

sell covered callssell 1 abc Jan. 50 call @ 2,

& own 100 shares abcbear strike + prem.- cost of strike cost - premium cost - premium

sell uncovered putssell 1 xyz Feb. 35 put @ 3,

& not short xyz stockbull premium strike - premium strike - premium

sell covered putssell 1 xyz Feb. 35 put @ 3,

& short 100 shares xyzbull SS + prem. - strike unlimited SS + premium

call credit spreadbuy 1 abc Oct. 50 call @ 5,

sell 1 abc Oct. 40 call @ 8bear net credit diff in strike - net credit lower strike + credit

call debit spreadbuy 1 abc Jan 50 call @ 8,

sell 1 abc Jan 40 call @ 5bull diff in strike - net debit net debit lower strike + debit

put debit spreadbuy 1 abc Nov. 40 put @ 8,

sell 1 abc Nov. 50 put @ 5bear diff in strike - net debit net debit higher strike - net debit

put credit spreadbuy 1 axy Dec. 40 put @ 5,

sell 1 axy Dec. 50 put @ 8bull net credit diff in strike - net debit higher strike - net credit

buy straddle buy 1 xyz Oct. 130 call @ 8,

buy 1 xyz Oct.130 put @ 6volatility call unlimited, put strike - prem. premium call strike + prem., put strike - prem.

sell straddlesell 1 xyz Oct. 130 call @ 5,

sell 1 xyz Oct. 120 put @ 7flat premium call unlimited, put strike - prem. call strike + prem., put strike - prem.

protective put buyer

buy 100 shares xyz @ 80

buy 1 xyz July 80 put @ 2.50

(at the same time)

hedge unlimited cost + prem. - strike cost + prem. (cost basis)

protective call buyer

SS 100 shares xyz @ 80

buy 1 xyz July 80 call @ 3

(at the same time)

hedge short sale - prem. strike + prem. - short sale cost - prem. (cost basis)