Trading Strategies with Options

9 Pages Posted: 21 Oct 2008

See all articles by Robert M. Conroy

Robert M. Conroy

University of Virginia - Darden School of Business


This technical note provides a brief introduction to option trading strategies. It covers pay-off diagrams and specifically introduces bull spreads, butterfly spreads, and calendar spreads. It also introduces straddles, strips, and strangles.



Rev. Feb. 2, 2016

Trading Strategies with Options

One of the unique aspects of options is the ability to combine positions and design the payoff structure, which best suits your expectations. In a world without options, the basic investment choice is to simply buy or sell a share of stock. Assuming that you buy today at S0 = $ 45 and sell in six months at ST, the payoff at maturity would look like Figure 1.

Figure 1. Payoff and profit.

. . .

Keywords: options, trading strategies

Suggested Citation

Conroy, Robert M., Trading Strategies with Options. Darden Case No. UVA-F-1429, Available at SSRN:

Robert M. Conroy (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States


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