Option Combination Trading

This course gives participants with a working knowledge of options, an understanding of how multiple options can be combined to create different exposures to changes in the financial instruments on which they are based.

These combination trades can be used to increase or limit, the profit or loss that arises for the trader. The course covers this from both an outright market view and hedging perspective. It also looks at how these strategies can create exposure to changes in both the underlying and in the volatility.

Exercises throughout the course allow participants to price and value a range of combination trades.


This course is for individuals with a working knowledge of options.

Learning Outcomes

At the end of this course delegates should understand:

  • A range of combination option trading strategies
  • How to calculate the payoff and returns of combined option trades in a variety of scenarios
  • How to price combination option trades

Course Content

  • Buyside considerations
  • Rationale for trading options
  • Exchange traded VS OTC
  • Top 10 structures
  • Bullish option trading
  • Long call
  • Short put
  • Risk reversal

Exercises: Calculating returns on investments for combined option trades in a variety of scenarios

  • Hedging option trading
  • Protective put
  • Covered call
  • Volatility option trading
  • Straddles and strangles
  • Tail risk
  • Butterflies and condors

Exercises: Recommending appropriate option trades

  • Option spread trading
  • 1×1 call spreads
  • 1×2 call spreads
  • Call ladder
  • Call spread put (seagull)
  • Share repair and the turbor

Exercises: Pricing structured option trades


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