Both credit spreads and debit spreads are vertical spreads: you buy one option and sell another option of the same type (both calls or both puts) on the same underlying, with the same expiration but different strikes. The strategies look almost identical on paper. The difference that matters comes down to one question: do you collect cash when you open the trade, or do you pay it? That single detail changes how max profit and max loss are capped, which direction you need the stock to move, and which implied volatility environment favors the trade. ...

Most short options ride out their entire life without ever being exercised early. Holders generally prefer to sell the contract rather than exercise it, since selling captures both intrinsic and extrinsic value while exercising throws the extrinsic value away. There’s one major exception: in-the-money short calls right before a stock’s ex-dividend date. That’s where the overwhelming majority of early assignments come from, and the reason comes down to a simple, calculable trade-off. ...

Selling a cash-secured put means you’re setting aside enough cash to buy 100 shares at a strike price if the option gets assigned, in exchange for collecting a premium up front. The strategy is popular for generating income or for getting into a stock at a discount, but comparing one put to another requires more than just looking at the premium dollar amount. This guide covers the core formulas, including the one most traders skip: annualizing the return so you can compare puts with different expirations on equal footing. ...

Selling a covered call is simple in concept (you own shares and sell a call against them for income), but the numbers behind it (breakeven, return, and how much cushion you have if the stock drops) are what should drive your decisions. This guide walks through each formula and shows exactly how to run the math by hand. For a refresher on how the strategy works mechanically, see the covered call strategy guide or the covered call 101 walkthrough. If you want the numbers computed for you, the options profit calculator has a dedicated covered call mode. ...

A credit spread is a defined-risk options strategy where you sell one option and buy a further out-of-the-money option of the same type and expiration, collecting a net credit for the difference. Because both max profit and max loss are capped, the math is straightforward once you know the formulas. But the breakeven direction flips depending on whether you’re trading a put spread or a call spread, which trips up a lot of newer traders. This guide covers both. ...

An iron condor is a defined-risk, defined-reward options strategy, which means you can know your worst-case loss and best-case gain before you ever place the trade. The catch is that a lot of traders calculate it wrong. Specifically, they average the two spread widths instead of using the wider one. That single mistake can lead to a position that’s carrying far more risk than the trader thinks. This guide walks through the correct formulas and a full worked example. ...

If you sell covered calls regularly, you’ll eventually run into a stock that rallies past your strike price before expiration. At that point you have a choice: let the shares get called away, or roll the position to buy yourself more room and more premium. Rolling is one of the most useful adjustment tools in an options seller’s toolkit, and the mechanics are simpler than they sound once you break them down. ...

An options profit calculator turns a handful of numbers from your trade ticket (strikes, premium, contracts) into the three things every options trader actually needs before placing a trade: max profit, max loss, and breakeven. The options profit calculator on this site does this for single-leg trades like long calls and puts, income strategies like covered calls and cash-secured puts, and multi-leg trades like credit spreads, debit spreads, and iron condors. ...

Iron condors and iron butterflies are both defined-risk, range-bound options strategies built from four legs: a put spread and a call spread combined into one position. The skeleton is the same. What’s different is where you put the short strikes, and that one choice explains almost everything about how each trade behaves. The Shared Structure Both strategies are built the same way: Sell a put, buy a further OTM put (a credit put spread) Sell a call, buy a further OTM call (a credit call spread) Combined, these four legs create a position that profits if the underlying stays within a defined range through expiration, with losses capped on both sides no matter how far the stock moves. For a full breakdown of the individual legs and payoff mechanics, see Iron Condor 101 and Iron Butterfly 101. ...

If you sell options (whether covered calls, cash-secured puts, or naked positions), you’ve taken on the obligation to buy or sell stock if the person on the other side of the trade decides to exercise their contract. That obligation is called assignment risk, and knowing when it’s actually likely to happen, and what it does to your account, is one of the most useful things an options seller can learn. ...