Reference
Strategy encyclopedia
Every strategy the app can recommend, explained in plain English. For longer reads on each one, head to the guide.
Broken Wing Butterfly
What it is
A three-leg trade (1 long, 2 short, 1 long) with asymmetric wings. Tuned to collect a net credit such that, at expiration, only a sharp move into the narrow wing produces a loss.
When to use
When you think the stock will drift, drop, or rise modestly over the next 30 to 45 days. IV rank matters less than the chain math; the structural edge comes from the skewed wings.
Risk profile
Defined max loss on the wing side. Downside (or the unfavoured side) is bounded by the credit collected. Path-dependent intraday risk is real if the underlying gaps near expiration.
Example
ORCL at $180: buy the 170 call, sell two 180 calls, buy the 185 call. If ORCL stays at or below $185 at expiration, you keep the credit.
Common mistake
Going too far OTM to chase a bigger credit. Optimal strikes place the peak profit roughly one standard deviation above spot.
Jade Lizard
What it is
Short put plus short call spread. Structured so total credit exceeds the call spread width, which removes upside risk by construction.
When to use
High IV rank environments where both put and call premium are inflated. Neutral-to-bullish bias.
Risk profile
Downside runs to the short put strike (same as a cash-secured put). Upside is structurally capped at the credit collected — provided the credit exceeds the call-spread width.
Example
SPY at $500: sell the 470 put for $4, sell the 520 call for $3, buy the 525 call for $1.50. Total credit $5.50 on a $5 call spread, so the upside max loss is structurally bounded at the credit collected.
Common mistake
Forgetting the credit-greater-than-call-spread-width rule. Without it, the trade collapses to a risky short strangle.
Poor Man's Covered Call
What it is
Buy a deep-ITM LEAPS call, sell shorter-dated OTM calls against it. Capital-efficient cousin of a covered call.
When to use
When you want long-term exposure to a stock but do not want to tie up the capital for 100 shares. Works best on low-to-moderate IV stocks.
Risk profile
Downside risk equals the debit paid for the LEAPS minus short-call credits collected. Upside capped at short strike each cycle.
Example
NVDA at $900: buy Jan 2027 700 call for $260; sell Feb 1000 call for $15. Net debit $245; profit if NVDA stays above $700 and at or below $1,000.
Common mistake
Choosing a LEAPS with delta below 0.7. Lower delta means more time decay and less stock-like behavior.
Asymmetric Poor Man's Covered Call
What it is
A PMCC that sells fewer short calls than LEAPS held — usually a 10-to-7 ratio for a 0.70-delta LEAPS. The mismatched short count keeps the position net long delta even on a sharp rally.
When to use
When you want PMCC-style premium income but are worried about the underlying breaking out to the upside. Common on names with momentum but elevated short-call delta acceleration.
Risk profile
Same downside as a standard PMCC (LEAPS drawdown on a sharp drop). The upside is improved: the uncovered LEAPS contracts keep paying on a runaway rally instead of dragging you net short.
Example
Hold ten 70-delta NVDA LEAPS. Standard PMCC would sell ten 30-delta short calls; the asymmetric version sells only seven. The other three LEAPS stay uncovered for uncapped upside.
Common mistake
Forgetting to scale the short count when you change the LEAPS quantity. The protective ratio breaks if you trade five LEAPS but still sell four short calls (you lose most of the upside protection).
Zero-Cost Collar
What it is
Long stock plus protective put plus covered call financed by the call premium. Downside capped.
When to use
When you want to hold a stock through uncertainty but cannot stomach a big drawdown. Works at any IV regime.
Risk profile
Downside limited to cost basis minus put strike. Upside capped at call strike.
Example
AAPL at $200, you own 100 shares. Buy the $190 put, sell the $215 call, net cost roughly zero. Protected below $190, capped above $215.
Common mistake
Choosing strikes so tight that you give up too much upside. Rule of thumb: put 5 to 8% below spot, call 5 to 8% above.
Stock Repair
What it is
Adds a 1×2 call structure on top of underwater stock. Cuts effective breakeven roughly in half.
When to use
When you own stock that is 5 to 15% underwater and a full recovery seems far away but a partial rebound is likely.
Risk profile
No new downside risk. Upside capped at the short strike.
Example
You bought AAPL at $210; it is now at $190. Buy 1 of the $190 call, sell 2 of the $200 calls. Now you break even at $200 instead of $210.
Common mistake
Doing it too early. If the stock just dropped today, wait. Volatility is usually rich right after a drop, hurting the trade.