Public offers fundamental strategies, including Long Calls, Long Puts, Covered Calls and Cash-Secured Puts, as well are more complicated multi-leg strategies, including Long Straddles & Strangles, Collars, Debit Spreads, Long Butterflies, and Long Condors (for members that are approved for these strategies). Public will add Credit Spreads, Short Butterflies, and Short Condors later this year when we launch Margin Investing.
A long call gives an investor the right to buy shares of a stock or ETF at a specific strike price before the contract’s expiration date. Long calls are typically used when the investor anticipates the stock's price will rise, allowing them to profit from potential price increases.
A long put gives investors the right to sell underlying shares of a stock or ETF at a specified strike price before the contract’s expiration date. Long puts are typically used by investors who expect an asset’s price to decline, signaling a bearish outlook on the stock's future.
A protective put is similar to a long put, but the investor also owns the underlying equity. In these scenarios, investors are typically looking to protect against a significant stock price decline, and limit their potential losses.
A covered call is when an investor is short a call, but owns the underlying equity. In exchange for giving someone else the right to buy the stock you own at a specific strike price within a set time frame, you receive a premium. It is a strategy many investors use to earn additional income from their stock positions while limiting their risk. Covered calls are often used by investors who plan to hold the underlying equity for a long time but do not expect a substantial price increase during the duration of the call option.
A cash-secured put is when an investor is short (or the writer of) a put, but has set aside the necessary cash as collateral to purchase shares of the underlying equity in case the put were to be assigned. Cash-secured puts are typically used when investors want to make a neutral to slightly negative bet on the price of the security.
A long straddle involves buying both a call and a put option with the same strike price and expiration date. Investors may use a long straddle when they expect significant price movement in the underlying asset but are uncertain about the direction of the movement. Long straddles allow investors to potentially profit from a substantial price swing, whether up or down.
A long strangle involves buying a call and a put option with the same expiration date but different strike prices. The call’s strike price is always higher than the put’s strike price. Investors may use a long strangle when they expect significant price volatility in the underlying asset but are uncertain about the direction of the movement.
A debit spread involves buying and selling options of the same type (call or put) with the same expiration date but different strike prices. It’s called a "debit" spread because it requires you to pay a net premium to create the strategy. Debit spreads can use call options (bullish) or put options (bearish), depending on the investor’s outlook.
Credit Spread (Credit Spreads will be coming in Q4)
A credit spread involves buying and selling options of the same type (call or put) with the same expiration date but different strike prices. It’s called a "credit" spread because it results in a net premium credit, or sale proceeds, when you create the strategy. Credit spreads can use call options (bearish) or put options (bullish), depending on the investor’s outlook.
A long calendar spread, also known as a time spread or horizontal spread, involves buying and selling two options of the same type (call or put) with the same strike price but different expiration dates. It's designed to profit from the difference in time decay between the two options, assuming minimal changes in the underlying asset's price.
Public does not currently permit strategies involving unlimited risk, such as naked puts and naked calls. Learn more about Option levels in our FAQs, or about various option strategies in Public’s Options Education Hub.
For further questions please contact Member Support via in-app chat or email at support@public.com.
Options carry significant risk and are not suitable for all investors. Options investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date. Certain complex options strategies carry additional risk. There are additional costs associated with option strategies that call for multiple purchases and sales of options. Supporting documentation for any claims will be furnished upon request. Prior to buying or selling an option, investors must read and understand the “Characteristics and Risks of Standardized Options,” which can be found at: public.com/ODD. See full terms of the Options Order Flow Rebate Program at public.com/disclosures/rebate-terms. Rebate rates are subject to change for new and existing enrollees.