Long Plays:

(Purchase option, owns rights afforded) i.e., buy straddles, strangles; no margin.

Short Plays:

(Writing or selling options assuming the obligation to perform the rights afforded) i.e., sell out-of-the-money spreads; margin required.

Straddles:

Done with puts and calls with the same strike price and when the stock is near the strike price.

Strangles:

Done with puts and calls that are out-of-the-money and when the stock is midway between strike prices.

Bull Spreads:

("Buy" lowest strike price, "sell" highest strike price)

with calls:

Net debit transaction; maximum loss = debit; maximum profit = difference between strike prices less the debit; no margin.

with puts:

Net credit transaction; maximum loss = difference between strike prices less the credit; maximum gain = credit; requires margin.

Bear Spreads:

("Buy" highest strike price, "sell" lowest strike price)

with calls:

Net credit transaction; maximum loss = difference between the strike prices less the credit; maximum gain = credit; requires margin.

with puts:

Net debit transaction; maximum loss = debit; maximum profit = difference between the strike prices less the debit; no margin.

Time Spreads:

(Calendar Spreads) Sell the nearby month, buy the far away month; margin may be required.

with calls:

If Bullish: go with strike prices out-of-the-money

If Neutral: go with strike prices at-the-money

If Bearish: go with strike prices in-the-money

with puts:

If Bullish: go with strike prices in-the-money

If Neutral: go with strike prices at-the-money

If Bearish: go with strike prices out-of-the-money

Synthetic Positions:

(useful in evaluating positions that involve options and stocks)

Long Call:

Long Put + Long Stock

Short Call:

Short Put + Short Stock

Long Put:

Long Call + Short Stock

Short Put:

Short Call + Long Stock

Long Stock:

Short Put + Long Call

Short Stock:

Short Call + Long Put