Single calls and puts are the building blocks. Combine them - or pair them with stock you own - and you can shape risk and reward to fit a specific view: income, protection, a directional bet with a budget, or a wager on volatility itself. Here are the core strategies, simplest first, each with its payoff at expiration.
Educational only - not investment advice. Options involve substantial risk and aren't suitable for every investor. Nothing here is a recommendation to buy or sell anything. Examples are simplified and ignore commissions, taxes, and assignment timing. Consider speaking with a licensed financial professional.
Covered call income, lower risk
Own 100 shares and sell a call against them. You collect premium income; in exchange you cap your upside at the strike. One of the more conservative options strategies, often used to squeeze income from shares you already hold.
Own 100 shares bought at $100, sell a $105 call for $2. Upside caps at $105 (you keep $5 gain + $2 premium = $7); the $2 premium softens downside. You give up gains above $105.
Cash-secured put income / entry, lower risk
Sell a put while setting aside the cash to buy the shares if assigned. You get paid to wait: keep the premium if the stock holds up, or buy the stock at a discount (the strike, minus the premium you collected) if it falls. A disciplined way to enter a position you wanted anyway.
Sell a $95 put for $3, cash set aside to buy. Keep the $3 if the stock stays above $95; below that you're assigned shares at $95 (effective cost $92). A way to get paid to wait for a lower entry.
Vertical spread (bull call) directional, defined risk
Buy one call and sell a higher-strike call in the same expiration. The sold call helps pay for the one you bought, lowering your cost - but it caps your gain. Both your maximum profit and maximum loss are known up front. Spreads are the real stepping-stone from single options to everything more advanced.
Buy the $100 call ($5), sell the $110 call ($2): net cost $3. Max profit $7 above $110, max loss the $3 paid. Cheaper than a lone call - but upside is capped.
Straddle volatility bet
Buy a call and a put at the same strike and expiration. You don't care which way the stock goes - only that it moves far. Profits from a big swing in either direction; loses if the stock sits still and time decay erodes both legs. Often used around events like earnings. (A strangle is the same idea using out-of-the-money strikes - cheaper, but it needs a bigger move.)
Buy a $100 call and a $100 put for $5 each ($10 total). Profits from a big move either way - above $110 or below $90. Loses if the stock sits still. A bet on volatility, not direction.
Iron condor range-bound, defined risk
The opposite bet: that a stock won't move much. Sell an out-of-the-money put and call to collect premium, and buy further-out options as protective "wings" that cap your risk. Maximum profit if the stock stays in the range between your sold strikes; losses are limited by the wings. (A butterfly is a related defined-risk, pin-the-price structure.)
Sell a $95 put and $105 call, buy a $90 put and $110 call for protection. Collect a credit (~$2). Max profit if the stock stays between $95-$105; losses are capped by the wings. A bet the stock stays range-bound.
A pattern to notice: strategies where you're a net seller of options (covered call, cash-secured put, iron condor) tend to profit from time decay and calm markets, with capped gains. Strategies where you're a net buyer (long call/put, straddle) profit from big moves, with capped losses but a constant time-decay headwind. Matching the structure to your actual view is the whole game.