BetterTrades is an all-purpose stock market education company with a special focus on options trading. Our belief in options stems from years of trading experience. Over the years, we've developed some favorites. Here are a few brief descriptions of trading strategies. You'll learn more by attending an educational class.

A bull call spread involves an investor buying a call option with a relatively low exercise price while hedging some of the purchase price by selling a call with a relatively higher exercise price. The end result a trader is expecting is for the underlying asset to increase, but not above the exercise price of the out-of-the-money call, and for the purchased call to end in-the-money.

A bear call spread takes the short position of a bull spread. Here, the investor will buy a call with a relatively higher exercise price and will sell a call with a lower exercise price. The buyer hopes to benefit from falling stock prices with upside protection from the long call.

The butterfly spread with puts combines going long one put with a low exercise price, buying a second put with a higher exercise price, and selling two puts with intermediary exercise prices. The max value of a long put butterfly spread exists where the underlying instrument closes at the exercise price of the written puts.

A straddle is the purchase of a put and call option with the same exercise price and expiration date. In the case of a long straddle, the investor hopes to profit from a large price move. If the investor believes a security will see little price movement, a short straddle, or sale of a put and call with the same exercise price and maturity, can be employed. A long strangle involves buying a call and put on an asset with the same expiration while the call exercise price is greater than the put exercise price. A short strangle is effectively a long iron condor without the wings.

The iron condor is an instrument used to make money as stocks move sideways, consisting of a derivation of an equal number of bull put spreads and bear call spreads. Iron condors are employed by traders seeking regular income on investment capital who speculate that an asset's spot price will lie between short strikes at expiration with the highest terminal value. Essentially, the trader will construct a position with relatively narrow short strike spreads that are still wide enough to enable the spot price to remain in the range of the short strikes for the contract's duration. Profits are realized above the lower break even (the sold put strike price minus the total net credit) and below the upper break even (the sold put strike price minus the total net credit). The maximum potential loss in going long an iron condor is the call-put spread difference times the contract size, minus the net credit received. The iron condor distinguishes itself from a plain condor in that it has a vertical spread position above and below the current spot price, whereas a plain condor (with calls or puts) has all strikes above or below the current spot price of the underlying asset.