Options can express a view with defined risk, but they are not simple. Payoff diagrams show max profit, max loss, and breakeven before you treat any structure as part of a plan.
xychart-beta
title "Bull call spread — example payoff at expiry"
x-axis ["90", "95", "100", "105", "110", "115"]
y-axis "P/L ($)" -5 --> 8
line [-3, -3, -3, 2, 5, 5]
Common strategy families
- Covered call: own shares and sell a call for income; upside is capped.
- Protective / married put: own shares and buy a put for downside insurance.
- Bull call spread: buy a lower-strike call and sell a higher-strike call; defined risk and capped reward.
- Bear put spread: buy a higher-strike put and sell a lower-strike put; defined downside view.
- Long straddle: buy call and put at the same strike; needs a large move.
- Long strangle: buy out-of-the-money call and put; cheaper but needs a larger move.
- Iron condor: range-bound income strategy with defined risk.
Reference: Investopedia options strategies. Daily Juslit briefs attach payoff and entry/exit diagrams for educational context only.
Risk boundary: trading is high risk and can produce faster losses than investing. We only use limited trading capital after long-term investing and emergency liquidity are secure.