Topic
Options
Once a single call or put makes sense, the next step is combining them: spreads that cap the risk, calendars that trade time, and structures with a naked leg hiding inside.
Every multi-leg option trade is a set of single contracts, and each leg keeps its own risk until the whole position is closed. The payoff chart is the easy part. Assignment, volatility and the week of expiration are where the structures differ.
Work through vertical spreads first, then calendars and diagonals, then butterflies and ratio spreads. The dictionary entries explain the volatility term structure and synthetic positions the spreads rely on.
Viewpoints
All viewpoints →-
By the numbers
A Butterfly Spread Is the Cheapest Way to Be Precisely RightWhen you have a precise price target and a date, a butterfly buys that view for a small, fixed debit; wrong targets cost only the debit.
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Myth check
A Ratio Spread Hides a Naked Option in the Fine PrintA zero-cost ratio spread is an uncovered short option with a subsidy attached; size and approve it as one.
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The case
Options Calendar Spreads Are a Bet on VolatilityA calendar spread profits from a quiet stock only if back-month implied volatility holds; treat it as a volatility trade first.
Walkthroughs
All walkthroughs →Dictionary
Full dictionary →- Diagonal spread
An options spread that is long one option in a later expiration and short one option of the same type in a nearer expiration, at a different strike price.
- Synthetic long stock
A position made by buying a call and selling a put on the same underlying, at the same strike and expiration, whose payoff at expiration matches owning 100 shares bought at that strike.
- Volatility term structure
The pattern of implied volatility across the expiration dates of one underlying's options, usually read as a curve from the nearest expiration to the furthest.
Courses, practice and tools
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Free course · Intermediate
After the Covered Call: Option Spreads, Step by StepTraders who understand single calls and puts, hold spread approval on their account, and want defined-risk trades they can size in advance.
Lessons with a quiz at the end of each