Educational use only — not investment advice. See full disclaimer in README.md.
A picture of the at-expiration profit/loss for every structure in the toolbox. Read the shape — where you make money, where you lose, where the kinks (strikes) and crossings (breakevens) are. These are expiration diagrams; before expiry the curves are smoother (time value rounds the corners) and shift with IV.
How to read every chart:
profit ↑ the horizontal line ── 0 ── is breakeven (P&L = $0)
+ │ a kink in the line is a STRIKE
0 ┼──────► price of underlying at expiration →
− │ flat segments = capped P&L · sloped = 1:1 with price (per 100 sh)
Symbols: ╱ ╲ sloping P&L · ─── capped (flat) P&L · ● a strike · ┊ breakeven crossing · ▲max profit zone · ▼max loss zone.
Index Long call · Long put · Covered call · Bull call (debit) · Bull put (credit) · Bear put (debit) · Bear call (credit) · Iron condor · Iron fly · Short strangle · Short straddle · Long straddle · Long strangle · Butterfly · Broken-wing fly · Jade lizard · Call backspread · Put backspread · Calendar · PMCC · Collar · Protective put
DIRECTIONAL — LONG SINGLE OPTIONS
Long call
Bullish · debit · loss capped at premium · unlimited upside. BE = strike + debit.
+│ ╱
│ ╱
0┼──────────●────┊──────╱──────► ● = strike ┊ = BE (strike+debit)
│ ▼▼▼▼╱
−│ loss capped = premium paid (flat below strike)
Long put
Bearish · debit · loss capped at premium · large gain as price→0. BE = strike − debit.
+│ ╲
│ ╲
0┼───────╲──────┊────●──────────► ● = strike ┊ = BE (strike−debit)
│ ╲▼▼▼▼
−│ loss capped = premium paid (flat above strike)
COVERED / SECURED (income, L1)
Covered call · short put / CSP (same shape)
Capped upside, downside like owning stock cushioned by premium. A short put has this identical payoff. CSP BE = strike − credit.
+│ ┌──────────── ▲ capped gain (strike + premium)
│ ╱──┘
0┼────────┊──╱───────────────────► ┊ = BE (basis − premium)
│ ╱──┘
−│ ╱──┘ downside ≈ long stock, cushioned by the premium (large but finite, →0)
VERTICAL SPREADS (defined risk, L3) — the workhorses
Bull call spread (debit)
Bullish · pay debit · both profit & loss capped. BE = long strike + debit · Max profit = width − debit · Max loss = debit.
+│ ┌──────────── ▲ max profit = (width − debit)
│ ╱──┘
0┼────────┊─╱──────────────────► ● long strike … ● short strike (the kinks)
│ ▼▼▼▼─╱ ┊ = BE (long strike + debit)
−│ max loss = debit (flat below long strike)
Bull put spread (credit)
Bullish/neutral · collect credit · profit if price stays up. BE = short strike − credit · Max profit = credit · Max loss = width − credit.
+│ ┌─────────────── ▲ max profit = credit (price above short strike)
│ ╱──┘
0┼──────┊─╱─────────────────────► ● long(lower) … ● short(upper) strikes
│ ▼▼▼─╱ ┊ = BE (short strike − credit)
−│ max loss = (width − credit), flat below the long strike
Bear put spread (debit)
Bearish · pay debit · both capped. BE = long(upper) strike − debit · Max profit = width − debit · Max loss = debit.
+│ ▲ max profit = (width − debit)
│ ────────┐
0┼─────────└─╲─┊──────────────────► ● short(lower) … ● long(upper) strikes
│ ╲──┐ ┊ = BE (upper strike − debit)
−│ └──────── max loss = debit (flat above upper strike)
Bear call spread (credit)
Bearish/neutral · collect credit · profit if price stays down. BE = short(lower) strike + credit · Max profit = credit · Max loss = width − credit.
+│ ▲ max profit = credit (price below short strike)
│ ───────────┐
0┼────────────└─╲┊─────────────────► ● short(lower) … ● long(upper) strikes
│ ╲───┐ ┊ = BE (short strike + credit)
−│ └────── max loss = (width − credit), flat above long strike
NEUTRAL / RANGE (premium income)
Iron condor
Neutral · credit · profit in a central band, losses capped on both wings. BEs = short put − credit & short call + credit · Max profit = credit · Max loss = width − credit.
+│ ┌────────────┐ ▲ max profit = credit (price between the shorts)
│ ╱──┘ └──╲
0┼──────┊─╱──────────────────╲─┊───► ●● put spread … call spread ●●
│ ▼▼▼─╱ ╲─▼▼▼
−│ max loss = (width − credit), capped on EITHER wing
Iron butterfly (iron fly)
Neutral · bigger credit, narrower profit tent · peak at the body. BEs = body ± credit · Max profit = credit · Max loss = width − credit.
+│ ▲ peak = credit (price pins the body)
│ ╱─╲
0┼────────┊─╱───╲─┊─────────────────► ● long put … ●body(shorts)● … long call ●
│ ▼▼▼──╱ ╲──▼▼▼
−│ max loss = (width − credit), capped both sides
Short strangle
🔴 UNDEFINED (L4) · neutral · profit in a band · losses open on both tails. BEs = put strike − credit & call strike + credit.
+│ ┌───────────────┐ ▲ max profit = credit (between strikes)
│ ╲──┘ └──╱
0┼──────┊───────────────────────┊───► ● short put … short call ●
│ ╲──┘ └──╱
−│ ╲ loss grows on BOTH tails (down: large; up: UNLIMITED) ╱
Short straddle
🔴 UNDEFINED (L4) · max credit at a single strike · tight tent, open tails. BEs = strike ± credit.
+│ ▲ max profit = credit (pin at strike)
│ ╱──╲
0┼──────┊───────────┊────────────────► ● single strike (both shorts)
│ ╱ ╲
−│ ╱ unlimited up / large down (no wings to cap it) ╲
VOLATILITY — LONG (you want a big move)
Long straddle
Long vol · debit · profit on a big move either way, loss if it sits still. BEs = strike ± total debit · width between BEs = the expected move you must beat.
+│ ╲ ╱
│ ╲ ╱
0┼─────╲──────┊──●──┊──────────╱─────► ● strike ┊┊ = strike ± debit
│ ╲ ▼▼▼▼▼▼▼ ╱
−│ ╲────────────╱ max loss = total debit (at the strike)
Long strangle
Long vol · cheaper than a straddle · needs a bigger move; flat-bottomed max loss between strikes. BEs = call strike + debit & put strike − debit.
+│ ╲ ╱
│ ╲ ╱
0┼─────╲──┊──●──────────●──┊──────╱──► ●● = put & call strikes
│ ╲ ▼▼▼▼▼▼▼▼▼▼▼▼▼▼ ╱
−│ └──── max loss = debit (flat between the strikes) ────┘
BUTTERFLIES & RATIOS
Long butterfly
Cheap pin bet · debit · peak at the body, small defined loss in both tails. BEs = low strike + debit & high strike − debit · Max profit = wing width − debit · Max loss = debit.
+│ ▲ peak = (wing − debit) at the body
│ ╱─╲
0┼────────┊────╱────╲────┊──────────► ● low … ● body … ● high (1 / −2 / 1)
│ ▼▼▼▼▼▼▼╱ ╲▼▼▼▼▼▼▼
−│ small capped loss = debit on EITHER tail
Broken-wing butterfly (call, credit version)
Skewed fly, wider far/upper wing, entered for a credit → no downside loss. Max profit = lower-wing + credit (at body) · upside max loss = (upper − lower wing) − credit · downside = keep credit.
+│ ▲ peak = (lower wing + credit) at the body
│ ╱─╲
0┼───────────────────╲────┊──────────► ● K1 … ● K2 body … ●──── wide ────● K3
│ ───────────┘ ╲▼▼▼▼ keep credit below K1 (NO downside loss)
−│ flat small credit ↑ ▼ capped upside loss = (W2−W1−credit)
Call ratio backspread
Bullish + crash-up convex · sell 1 lower / buy 2 higher · small credit if it drops, unlimited up, defined valley loss between strikes. Upper BE = 2·long − short − credit (mirror of the put version below); max loss = (width − credit) at the long strike.
+│ ╱ (two long calls → unlimited, accelerating)
│ ╱
0┼──────────────┊─────────╱──────────► ● short(1, lower) … ● long(2, higher)
│ ───────────┐ ┊ ╱
−│ keep credit└──▼▼▼▼─╱ ▼ valley loss pinned at the long strike
Put ratio backspread
Bearish + crash-down convex · sell 1 higher / buy 2 lower · small credit if it rallies, huge gain as price→0, defined valley at the long strike. Lower BE = 2·long − short + credit; upper BE = short − credit.
+│ ╲ (two long puts → large, accelerating as price falls)
│ ╲
0┼─────╲────┊──────────┊──────────────► ● long(2, lower) … ● short(1, higher)
│ ╲▼▼▼ ┌──────────── keep credit above the short strike
−│ valley ▼ pinned at the long strike └ (rally = keep credit, no upside loss)
Jade lizard
🔴 short put leg (L4 / or cash-secured) · neutral-bullish · no upside risk when total credit ≥ call-spread width · downside like a short put. Down BE = put strike − total credit.
+│ ┌────────────────────────── ▲ no upside loss (credit ≥ call-spread width)
│ ╱──┘ (short put band)
0┼────┊─────────────────────────────────► ● short put … ●call spread●
│ ╱─┘
−│ ╱ downside ≈ short put (large, →0), cushioned by the whole credit
TIME / DIAGONAL
Calendar spread
Neutral, long vega · sell near-dated, buy far-dated same strike · tent-shaped peak at the strike (value comes from front decaying faster). Profits if price sits near the strike and/or IV rises; max loss = net debit.
+│ ▲ peak near the strike (front-month decays fastest here)
│ ╱──╲
0┼───────┊──╱────╲──┊─────────────────► ● shared strike
│ ▼▼▼─╱ ╲─▼▼▼ (a curve, not straight lines — value, not expiry intrinsic)
−│ max loss = net debit, if price runs far either way
Double calendar = two of these tents (put-side + call-side strikes) → a wider flat-topped profit zone.
Poor man’s covered call (PMCC)
Bullish · long deep-ITM LEAPS call + short near-dated OTM call · mimics a covered call for less capital. Shape ≈ a bull call spread but the long leg is far-dated (curved, keeps value).
+│ ┌──────────── ▲ gain capped near the short strike each cycle
│ ╱──┘
0┼────────┊─╱──────────────────► ● LEAPS strike (deep ITM) … ● short call (OTM)
│ ▼▼▼─╱ ┊ = BE (≈ LEAPS strike + net debit, improves as you collect credits)
−│ loss = net debit paid (much less than buying 100 shares)
HEDGING (stock + option combined)
Protective put
Long stock + long put = insured downside, full upside minus the premium. Floor = put strike − premium paid (relative to entry).
+│ ╱ (stock upside continues, minus premium)
│ ╱
0┼─────────────┊──────╱──────────────► ┊ = BE (stock entry + premium)
│ ───────────●╱ ● = put strike
−│ floor: losses STOP here (max loss = entry − strike + premium)
Collar
Long stock + long put + short call = downside floored, upside capped, often ~free. Floor at the put, ceiling at the short call.
+│ ┌────────── ▲ upside capped at the short call strike
│ ╱──┘
0┼────────┊─╱──────────────────► ● put (floor) … ● call (ceiling)
│ ──────●╱ ┊ ≈ BE (near entry; cost ≈ 0 for a zero-cost collar)
−│ floor: losses STOP at the put strike
How to use this with the rest of the manual
Match the shape to your view: want a band of profit (neutral) → condor/fly/strangle; want one-directional capped → a vertical; want convexity / a big move → long straddle/strangle or a backspread; want insurance → protective put/collar. The exact entry rules, Greeks, and management for each shape live in its strategy file — this page is just the map of where the money is.
Quick reference: cheatsheet.md · Strategy files: bullish · bearish · neutral/income · volatility · hedging
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