Spreads, straddles and condors: choosing the right options structure

Every options structure is an opinion about three things: direction, time and volatility. Choosing a structure is just making that opinion explicit.

A debit spread — buy one strike, sell a further one — expresses direction with a capped cost and reduced decay drag. It is usually a better expression of a directional view than a naked long option, particularly when implied volatility is elevated.

A credit spread expresses the view that price will not go beyond a level. Risk is capped by the long wing, margin is lower than a naked short, and the trade profits from time. This is the workhorse structure for disciplined sellers.

Straddles and strangles are volatility positions. Long versions want a large move in either direction and suffer if the market grinds; short versions want quiet and are dangerous into events.

An iron condor combines two credit spreads and profits from a range. It needs pre-defined adjustment rules — at what point do you roll the tested side, and what is the maximum total loss you accept — decided before entry, not during the move.