1.
About You
Edit Section 1
REQUIRED INFORMATION
Based on the information you provide (including your investment experience, market outlook and risk appetite), the Strategy Explorer will suggest options trading strategies that might be appropriate for you.
Using the Strategy Explorer does not commit you to any trading activity or create any client relationship between you and us. If you would like us to help you implement any strategy suggested by the Strategy Explorer (or any other derivative trading activity), you will need to become a client of ours. For more information, please see Open an Account or Contact Us. Please note that any suggestions made by the Strategy Explorer are not, and are not intended to be, investment or financial advice.
We hope you find the tool useful, but please do not hesitate to Contact Us if you would prefer to talk to a member of our team directly.
How many years of investment experience?
Knowing your experience will help us assess the suitability for you of the products and services we offer
0-1 YEARS
1-5 YEARS
5-10 YEARS
>10 YEARS
Have you traded options before?
Knowing if you have traded options will help us determine the right strategy for you
yes
no
What are you looking to achieve?
Please choose one - you can return to this page to explore other goals and objectives
PORTFOLIO PROTECTION
Using Options to generate income can be a good way to make your current stocks work instead of the stock becoming stagnant and flat.
INCOME GENERATION
If you feel the market and your portfolio will trend sideways, then you can use options as a tool to generate an additional source of income.
TACTICAL POSITIONING
Options are an effective way to position yourself for an anticipated outcome of time-specific events. Examples might include a change in government policy, earnings announcements, shifts in consumer confidence or inflation expectations.
2.
Market View
Complete Section 1
Edit Section 2
What is your market view?
BULLISH
I feel the market will go up
VOLATILITY UP
I anticipate a period of significant price swings or large directional moves
BEARISH
I feel the market will go down
VOLATILITY DOWN
I anticipate a period of sideways or mildly trending prices
NEUTRAL
I think the market will remain unchanged
What is your general risk appetite?
Knowing your risk appetite will help us determine your strategy
DEFINED RISK
Losses are limited by the nature of the instruments or strategies that you trade.
HIGHER RISK
Losses are potentially unlimited, and you could lose more than you have originally invested.
Start Over
3.
Strategy Calculator
Complete Section 1&2
Calculating your Strategies
YOUR STRATEGIES
Buy a Call
Buy a Call Spread
Buy a Put
Buy a Put Spread
Buy a Straddle
Buy a Strangle
Sell a Put
Sell a Call
Sell a Straddle
Sell a Strangle
Sell a Put Spread
Sell a Call Spread
Covered Call
Sell Iron Condor
Buy Iron Condor
Protective Put
Buy A Call
Configuration
- Buying a Call option
Outlook
- Bullish, volatility rising
Target
- The underlying asset being higher than the Call strike bought – premium paid
Pros
- Defined risk strategy
- Unlimited profit potential
Cons
- Premiums can erode quickly in a neutral or falling market
- Can be relatively expensive at the outset
- Market timing is very important
Configuration
- Buying a Call option
Outlook
- Bullish, volatility rising
Target
- The underlying asset being higher than the Call strike bought – premium paid
Pros
- Defined risk strategy
- Unlimited profit potential
Cons
- Premiums can erode quickly in a neutral or falling market
- Can be relatively expensive at the outset
- Market timing is very important
Buy a Call Spread
Configuration
- Buy a call option
- Sell a call option with a higher strike and the same expiry
Outlook
- Anticipate a moderately bullish move
Target
- Underlying stock price expires above the strike of the sold call option
Pros
- Defined risk strategy
- Cheaper to execute than buying an outright call so can get higher exposure for the same premium
Cons
- Your profits are capped at the level of the sold call
- The net effect of time decay is somewhat neutral. It’s eroding the value of the option you purchased (negative) and the option you sold (positive)
- Assignment risks on the sold call if American style
Configuration
- Buy a call option
- Sell a call option with a higher strike and the same expiry
Outlook
- Anticipate a moderately bullish move
Target
- Underlying stock price expires above the strike of the sold call option
Pros
- Defined risk strategy
- Cheaper to execute than buying an outright call so can get higher exposure for the same premium
Cons
- Your profits are capped at the level of the sold call
- The net effect of time decay is somewhat neutral. It’s eroding the value of the option you purchased (negative) and the option you sold (positive)
- Assignment risks on the sold call if American style
Buy a Put
Configuration
- Buying a Put option
Outlook
- Bearish, volatility rising
Target
- The underlying asset being lower than the put strike bought – premium paid
Pros
- Defined risk strategy
- Unlimited profit potential
- Good for hedging exposure on underlying assets
Cons
- Premiums can erode quickly in a neutral or rising market
- Can be relatively expensive at the outset
- Market timing is very important
Configuration
- Buying a Put option
Outlook
- Bearish, volatility rising
Target
- The underlying asset being lower than the put strike bought – premium paid
Pros
- Defined risk strategy
- Unlimited profit potential
- Good for hedging exposure on underlying assets
Cons
- Premiums can erode quickly in a neutral or rising market
- Can be relatively expensive at the outset
- Market timing is very important
Buy a Put Spread
Configuration
- Buy a put option
- Sell a put option with a lower strike and the same expiry
Outlook
- Anticipate a moderately bearish move
Target
- Underlying stock price expires below strike of the sold put option
Pros
- Defined risk strategy
- Cheaper to execute than buying an outright put so can get higher exposure for the same premium
Cons
- Your profits are capped by the sold put
- The net effect of time decay is somewhat neutral. It’s Eroding the value of the option you purchased (bad) and the option you sold (good)
Configuration
- Buy a put option
- Sell a put option with a lower strike and the same expiry
Outlook
- Anticipate a moderately bearish move
Target
- Underlying stock price expires below strike of the sold put option
Pros
- Defined risk strategy
- Cheaper to execute than buying an outright put so can get higher exposure for the same premium
Cons
- Your profits are capped by the sold put
- The net effect of time decay is somewhat neutral. It’s Eroding the value of the option you purchased (bad) and the option you sold (good)
Buy a Straddle
Configuration
- Buy a put with a strike price (typically at the money)
- Buy a call with the same strike price as the put
- Both options must have the same expiry date
Outlook
- Anticipates high volatility – You think a move is coming but are not sure which way (strategy employed before earnings statement etc)
Target
- Underlying price moves strongly in either direction
Pros
- Defined risk strategy
- Can benefit from a strong move in either direction
Cons
- High time decay in a neutral market
- Premiums can be very high
Configuration
- Buy a put with a strike price (typically at the money)
- Buy a call with the same strike price as the put
- Both options must have the same expiry date
Outlook
- Anticipates high volatility – You think a move is coming but are not sure which way (strategy employed before earnings statement etc)
Target
- Underlying price moves strongly in either direction
Pros
- Defined risk strategy
- Can benefit from a strong move in either direction
Cons
- High time decay in a neutral market
- Premiums can be very high
Buy a Strangle
Configuration
- Buy a put with a strike price below the current market price of the underlying asset
- Buy a call with a strike price above the current market price of the underlying asset
- Both options must have the same expiry date
Outlook
- Anticipates high volatility – you think a move is coming but are not sure which way (a strategy employed before company earnings etc)
Target
- Underlying asset moves strongly in either direction
Pros
- Defined risk strategy
- Can benefit from a strong move in either direction
Cons
- High time decay in a neutral market
- Premiums can be very high
Configuration
- Buy a put with a strike price below the current market price of the underlying asset
- Buy a call with a strike price above the current market price of the underlying asset
- Both options must have the same expiry date
Outlook
- Anticipates high volatility – you think a move is coming but are not sure which way (a strategy employed before company earnings etc)
Target
- Underlying asset moves strongly in either direction
Pros
- Defined risk strategy
- Can benefit from a strong move in either direction
Cons
- High time decay in a neutral market
- Premiums can be very high
Sell a Put
Configuration
- Sell a put option
Outlook
- Bullish to a neutral stance
Target
- The market to expire above the strike price of the option
Pros
- Falling volatility
- Time decay
- Alternative to buying the underlying asset
Cons
- Higher risk strategy
- Potential high loss if underlying asset goes to zero
- Can be exercised early if American style
Configuration
- Sell a put option
Outlook
- Bullish to a neutral stance
Target
- The market to expire above the strike price of the option
Pros
- Falling volatility
- Time decay
- Alternative to buying the underlying asset
Cons
- Higher risk strategy
- Potential high loss if underlying asset goes to zero
- Can be exercised early if American style
Sell a Straddle
Configuration
- Sell a put with a strike price typically at the money
- Sell a call with the same strike price as the put and with the same expiry
Outlook
- Anticipates decreased volatility – You think a period of calm is coming and have a neutral view
Target
- Underlying price of the asset to not move away from the strike you have chosen
Pros
- Premiums can be very attractive
- High time decay in a neutral market
Cons
- Higher risk strategy
- Beware of high margins
- Potential losses can accumulate very quickly
- Assignment risks on both options if they are American style
Configuration
- Sell a put with a strike price typically at the money
- Sell a call with the same strike price as the put and with the same expiry
Outlook
- Anticipates decreased volatility – You think a period of calm is coming and have a neutral view
Target
- Underlying price of the asset to not move away from the strike you have chosen
Pros
- Premiums can be very attractive
- High time decay in a neutral market
Cons
- Higher risk strategy
- Beware of high margins
- Potential losses can accumulate very quickly
- Assignment risks on both options if they are American style
Sell a Strangle
Configuration
- Sell a put with a strike price below the current market price of the underlying
- Sell a call with a strike price above the current market price of the underlying
Outlook
- Anticipates decreased volatility – You think a period of low volatility is coming and have a neutral view
Target
- Underlying price of the asset to be in the middle of the two strikes you have sold so that the options can expire worthless
Pros
- Premiums can be very attractive
- High time decay in a neutral market
Cons
- Higher risk strategy
- Beware of high margins
- Potential losses can accumulate very quickly
- Assignment risks on both options if they are American style
Configuration
- Sell a put with a strike price below the current market price of the underlying
- Sell a call with a strike price above the current market price of the underlying
Outlook
- Anticipates decreased volatility – You think a period of low volatility is coming and have a neutral view
Target
- Underlying price of the asset to be in the middle of the two strikes you have sold so that the options can expire worthless
Pros
- Premiums can be very attractive
- High time decay in a neutral market
Cons
- Higher risk strategy
- Beware of high margins
- Potential losses can accumulate very quickly
- Assignment risks on both options if they are American style
Sell a Put Spread
Configuration
- Sell a put option
- Buy a put option with a lower strike and the same expiry date
Outlook
- Anticipate a bullish or neutral move. Volatility falling
Target
- Underlying stock price expires above the strike of the sold put option
Pros
- Limited risk strategy
- Takes advantage of time decay, as both options near expiry the value of the spread becomes cheaper to buy back
- Lower margin requirement compared to selling naked puts
Cons
- Can be exercised early if American style
- Limited profit potential
- Can be margin intensive if underlying asset rises sharply
Configuration
- Sell a put option
- Buy a put option with a lower strike and the same expiry date
Outlook
- Anticipate a bullish or neutral move. Volatility falling
Target
- Underlying stock price expires above the strike of the sold put option
Pros
- Limited risk strategy
- Takes advantage of time decay, as both options near expiry the value of the spread becomes cheaper to buy back
- Lower margin requirement compared to selling naked puts
Cons
- Can be exercised early if American style
- Limited profit potential
- Can be margin intensive if underlying asset rises sharply
Sell a call spread
Configuration
- Sell a call option
- Buy a call option with a higher strike and the same expiry date
Outlook
- Anticipate a moderately bearish move
Target
- Underlying stock price expires below the strike of the sold call option
Pros
- Defined risk strategy
- Takes advantage of time decay as both options near expiry, the value of the spread becomes cheaper to buy back
- Lower margin requirement compared to selling naked calls
Cons
- Can be exercised early if American style
- Limited profit potential
- Can be margin intensive if the underlying asset rises sharply
Configuration
- Sell a call option
- Buy a call option with a higher strike and the same expiry date
Outlook
- Anticipate a moderately bearish move
Target
- Underlying stock price expires below the strike of the sold call option
Pros
- Defined risk strategy
- Takes advantage of time decay as both options near expiry, the value of the spread becomes cheaper to buy back
- Lower margin requirement compared to selling naked calls
Cons
- Can be exercised early if American style
- Limited profit potential
- Can be margin intensive if the underlying asset rises sharply
Sell a Call
Configuration
- Selling a call option
Outlook
- Bearish to a neutral stance
Target
- The option just needs to expire below the strike price you sold
Pros
- Benefits from time decay and falling volatility
- Can be used as a type of hedge against underlying assets (See Covered Call)
Cons
- Higher risk strategy
- Can be exercised early if American style
- Potentially unlimited losses
- Can be margin intensive if underlying asset rises sharply
Configuration
- Selling a call option
Outlook
- Bearish to a neutral stance
Target
- The option just needs to expire below the strike price you sold
Pros
- Benefits from time decay and falling volatility
- Can be used as a type of hedge against underlying assets (See Covered Call)
Cons
- Higher risk strategy
- Can be exercised early if American style
- Potentially unlimited losses
- Can be margin intensive if underlying asset rises sharply
Covered Call
Configuration
- Currently own the underlying asset
- Sell a call with a strike price near the current market price
Outlook
- Neutral
Target
- You want the stock to remain as close to the strike price as possible without going above it at expiry
Pros
- Can generate extra income from your underlying asset
- Benefits from time decay and falling volatility
Cons
- Can restrict the upside potential of your underlying asset
- Short call can be exercised early if European style option
- Can be margin intensive if underlying asset rises sharply
Configuration
- Currently own the underlying asset
- Sell a call with a strike price near the current market price
Outlook
- Neutral
Target
- You want the stock to remain as close to the strike price as possible without going above it at expiry
Pros
- Can generate extra income from your underlying asset
- Benefits from time decay and falling volatility
Cons
- Can restrict the upside potential of your underlying asset
- Short call can be exercised early if European style option
- Can be margin intensive if underlying asset rises sharply
Sell Iron Condor
Configuration
- Sell a call option
- Buy a call option with a higher strike
- Sell a put option
- Buy a put option with a lower strike
- All options to have the same expiry
Outlook
- Anticipate little to no movement and a decrease in volatility
Target
- The maximum profit is achieved if the underlying stock is between the lower call strike and upper put strike at expiration
Pros
- Defined risk strategy
- Time decay, volatility decreasing
Cons
- Assignment risk on the sold options if American style
- Limited profit potential
Configuration
- Sell a call option
- Buy a call option with a higher strike
- Sell a put option
- Buy a put option with a lower strike
- All options to have the same expiry
Outlook
- Anticipate little to no movement and a decrease in volatility
Target
- The maximum profit is achieved if the underlying stock is between the lower call strike and upper put strike at expiration
Pros
- Defined risk strategy
- Time decay, volatility decreasing
Cons
- Assignment risk on the sold options if American style
- Limited profit potential
Buy Iron Condor
Configuration
- Buy a put option
- Sell a put option with a lower strike
- Buy a call option
- Sell a call option with a higher strike
- All options to have the same expiry
Outlook
- Anticipate a sharp move in either direction with an increase in volatility
Target
- Underlying stock price expires above the sold call or below the sold put
Pros
- Defined risk strategy
- Able to profit whether the stock moves up or down
Cons
- Time decay works against this strategy eroding the value of the options spreads
- Gains are capped on the upside/downside
Configuration
- Buy a put option
- Sell a put option with a lower strike
- Buy a call option
- Sell a call option with a higher strike
- All options to have the same expiry
Outlook
- Anticipate a sharp move in either direction with an increase in volatility
Target
- Underlying stock price expires above the sold call or below the sold put
Pros
- Defined risk strategy
- Able to profit whether the stock moves up or down
Cons
- Time decay works against this strategy eroding the value of the options spreads
- Gains are capped on the upside/downside
Protective Put
Configuration
- If the underlying asset is currently owned
- Buy a put with a strike price near to the underlying asset’s current market price
Outlook
- Longer-term bullish but uncertain of the future
Target
- Stock to rise and your option to expire worthless. You can enjoy the profits on your stock position
Pros
- Defined risk strategy
- Caps potential losses on your underlying asset
Cons
- Can be relatively expensive at the outset
Configuration
- If the underlying asset is currently owned
- Buy a put with a strike price near to the underlying asset’s current market price
Outlook
- Longer-term bullish but uncertain of the future
Target
- Stock to rise and your option to expire worthless. You can enjoy the profits on your stock position
Pros
- Defined risk strategy
- Caps potential losses on your underlying asset
Cons
- Can be relatively expensive at the outset