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What option strategies are there beyond the wheel?

Past covered calls and cash-secured puts there are about a dozen strategies worth knowing. They sort into four jobs: collect premium while a stock goes nowhere, cut the capital a trade needs, protect shares you already own, and trade an event.

Options guide · 12-minute read · Updated 2026-10-29

What the wheel already does for you

The wheel strategy is two trades taken in turn. You sell a Put option on a stock you'd own, and if you get the shares you sell a Call option against them. Both trades are simple, both are allowed at a low broker approval level, and both pay you for being patient instead of right about direction.

Both also need a lot of cash. One contract is 100 shares. On a $50 stock that is $5,000 tied to one company.

Every strategy on this page exists to change one of three things: how much cash the trade needs, how wide a range it can win in, or what happens when you are wrong. None of them removes risk. They move it somewhere else, and the page tells you where.

Four jobs, and the strategies that do them

Job 1 — collect premium while the stock goes nowhere

The wheel wins when the stock stays flat or rises a little. These do the same job, but they let you win in a range instead of in one direction.

• Put credit spread. Sell a put, buy a cheaper put at a lower strike. You keep the difference in premium. You win if the stock stays above the strike you sold. The long put is a backstop that caps the loss.
• Call credit spread. The mirror image. Sell a call, buy a cheaper call at a higher strike. You win if the stock stays below the strike you sold.
• Iron condor. Both of those at once, on the same stock and the same expiry. You win if the stock finishes between the two strikes you sold. Two credits, one trade.
• Iron butterfly. An iron condor where the put you sell and the call you sell sit at the same strike. Much bigger credit, much smaller winning range.
• Short strangle. Sell an out-of-the-money put and an out-of-the-money call with no long options behind them. The biggest credit of the group, and the only one here with no cap on the loss.
• Jade lizard. A short put plus a call credit spread, sized so the total credit is bigger than the width of the call spread. Done that way there is nothing to lose above the call strikes. All of the risk sits on the downside, exactly like a short put.
• Calendar spread. Sell a near expiry and buy a longer one at the same strike. You pay a debit. You win if the stock sits near that strike while the near option loses its Theta faster than the far one.

Job 2 — take the same trade with less capital

• Put credit spread, again. This is the cheapest way to say "I think this stock holds this level". A $5-wide spread risks a few hundred dollars instead of thousands. The trade-off is that you never own the shares, so a stock that falls and recovers does not rescue you.
• Poor man's covered call (PMCC). Buy a deep in-the-money call a year or more out instead of buying 100 shares, then sell shorter-dated calls against it. It is a diagonal spread wearing a nickname.
• Diagonal spread. A calendar with different strikes as well as different expiries. The PMCC is the most common version.
• LEAPS. Any option a year or more from expiry. On its own it is a slow directional bet. Its real use here is as the long leg of a PMCC.

Job 3 — protect shares you already own

• Protective put. Buy a put below the price. A floor you paid for.
• Collar. Own the shares, buy that put, and sell a call above the price to help pay for it. A floor and a ceiling.
• Zero-cost collar. A collar where the call you sell pays for the put you buy, so the protection costs nothing out of pocket. The price is paid in upside: the ceiling comes in closer.

Job 4 — trade an event

• Long straddle. Buy a put and a call at the same strike. You win on a big move either way, as long as the move is bigger than both premiums added together.
• Long strangle. The same idea with out-of-the-money strikes. Cheaper to buy, needs a bigger move.
• Calendar spread before earnings. Sell the inflated near-dated option, buy the calmer later one. The hard part is that Implied volatility falls in both after the news.

Every strategy on one page

Capital figures below are for one contract on a hypothetical $50 stock, so you can compare them. "Level" is rough: brokers group options into approval levels and the exact ladder differs by broker.

You can draw any of these before you trade them in the options strategy payoff calculator, or start from your view of the stock in the options strategy finder.

The same idea three ways, worked out

Here is one view expressed three ways, so the trade-offs are numbers instead of adjectives. All three say "Northwind Freight will not fall below the mid-forties in the next month". (Hypothetical. An illustration, not a trade idea.)

Northwind Freight trades at $50. One month to expiry.

1. Cash-secured put. Sell the $45 put for $1.00. You collect $100 and your broker sets aside $4,500.
2. Put credit spread. Sell the $45 put for $1.00, buy the $40 put for $0.40. Net credit $0.60, so $60. Max loss is (5 × 100) − 60 = $440, and that $440 is all the trade ties up.
3. Iron condor. The same put spread, plus sell the $55 call for $0.70 and buy the $60 call for $0.30. Total credit $1.00, so $100. Both sides are $5 wide, so max loss is 500 − 100 = $400.

Now Northwind misses a quarter and finishes the month at $38.

Check the first row twice. Your cost per share is $45 − $1.00 = $44. The shares are worth $38, so $38 − $44 = −$6 a share, which is −$600.

Now read the table the other way. The spread lost less in dollars, but it lost all of the $440 it had at risk, and it left you holding nothing. The put seller lost more in dollars and still owns 100 shares worth $3,800 that can recover, and can sell a call against them. The condor collected the biggest credit and still took its full loss, because its put side is the same put side.

Why spreads need a higher permission level

Covered calls and cash-secured puts are the bottom of most brokers' options ladder, because the worst case is "you own a stock" or "you bought a stock". A spread has a second leg, and the broker has to trust you to manage both. Naked calls and short strangles sit at the top, because the worst case has no number.

Three things follow from that:

• The cheapest strategy on the table above may be the one you are not approved for yet. Apply for the level before you plan a trade around it. My guide to options approval levels walks through what brokers ask.
• Many brokers require a margin account for multi-leg spreads, and some do not allow them in registered accounts at all.
• In Canada, covered calls are widely allowed in a TFSA or RRSP; cash-secured puts depend on the broker, and multi-leg spreads are often refused in registered accounts, so check your broker's rules before you build a plan around one.

How to pick the one to learn next

Work backwards from the thing that is actually in your way.

• Not enough cash for one contract? Learn the put credit spread, then read options strategies for a small account.
• Stock keeps going sideways and your calls expire worthless for pennies? Learn the iron condor and the calendar spread, and see strategies for a sideways market.
• You want the covered call trade without $5,000? Learn the PMCC, starting with choosing the LEAPS strike.
• You own shares you can't afford to see halved? Learn the zero-cost collar.
• You already have a spread going against you? Go straight to the scenario: put credit spread tested, iron condor tested, credit spread assigned early, or expired between the strikes.

Learn one at a time, on paper, until you can write its max loss from memory before you open it. That number is the whole trade.

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