Posted in
Education
By: Tom Gentile
on July 24th, 2025
When it Come to Option Strategies, You Have Options
If you are an avid viewer of food preparation videos or tv shows, you may have come across a chef preparing a dish ‘3- ways’ as in here is a Duck three ways, and then they proceed to prepare it in three different styles (e.g. baked, fried, in a stew).
When it comes to options trading, one can choose to take a technical pattern or reason they believe a stock is going to trade higher and not only consider one option trade, say a long call option, but they can look at various option strategies.
I will outline three different type of ‘bullish’ option strategies for consideration should you believe in the security’s ability to trade higher, and you want to use options to make money on that pending move.
This is why I say in the title, when it comes to option strategies to consider, you have more than one option.
Two Type of Options
First off, there are two types of options, a Call, and a Put. A call gives on the right to buy stock at a specific price on or before a specific date. A Put gives one the right to sell stock at a specific price on or before a specific date.
Either of these can be bought or sold.
In either case when one first buys or sells they enter into an agreement (to either buy or sell the stock on or before that later date). This agreement is considered you ‘opening’ up an agreement that is why you will hear or see the term “Buy to Open” or “Sell to Open.”
Then when it comes time to end the agreement by exercising the right to buy or sell the option or if the option ‘opened’ is bought or sold to end the agreement it is considered being closed and you will see or hear the term “Sell to Close” or “Buy to Close”.
Types of Bullish Option Strategies
Though there are more than three, I will give you the three I primarily consider when initially ‘opening’ a trade.
Long Call
Goal: You expect the stock price to go up significantly
Profit Potential: Unlimited above the strike price minus premium paid
Risk: Limited to the premium you paid
Call Debit Spread
This is where one Buys to Open one call strike option and Sells to Open another call at a higher
Strike on the same order ticket. Both have the same expiration.
Goal: Expect moderate rise in stock price. For max profit one needs the ‘security’ to be above the sold strike at expiration
Profit Potential: Capped upside. Max profit potential is the difference between the strike prices minus net premium paid to ‘Open’ the trade
Risk: Lower than a long call; limited to net premium paid
(Call) Butterfly Spread
This is done using three option strike with the same expiration on the same order ticket
- Buy to Open 1 lower-strike call
- Sell to Open 2 middle-strike calls
- Buy to Open 1 higher-strike call
Goal: Expect the stock to stay near a specific price at expiration
Profit Potential: Max gain occurs if stock finishes at middle strike
Risk: Limited to net premium paid
In each of the three option scenarios the options trader needs to believe in the price of the security moving higher. It is best to have an assessment of a price target and time target for that to happen
To do that utilization of my scanning tool Money Calendar will help a great deal!
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Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
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