How to
How to compare two option strategies
Comparing two option strategies means lining up the same handful of numbers for each: maximum profit, maximum loss, breakeven price, probability of profit, and capital required. The 'better' strategy depends on which of those numbers matters most for a given market view and risk tolerance, not on which one has the highest headline return.
By Option Ideas Editorial Team · Published September 2, 2026
The five numbers to line up
- Max profit
- The best case, in dollars.
- Max loss
- The worst case, in dollars.
- Breakeven
- The stock price where the trade neither makes nor loses money.
- Probability of profit
- A delta-based estimate of the odds the position finishes profitable.
- Capital required
- What the trade actually ties up -- not always the same as max loss.
Worked example: long call vs. bull call spread
Same stock at $100, same $100 strike -- the numbers from the bull call spread guide, side by side with buying that call outright.
| Metric | Long $100 call | $100/$110 bull call spread |
|---|---|---|
| Capital required | $500 | $300 |
| Max profit | Unlimited | $700 (capped at $110) |
| Max loss | $500 | $300 |
| Breakeven | $105 | $103 |
The spread costs less, breaks even sooner, and loses less if wrong -- in exchange for giving up everything above $110. Neither is objectively better; the spread fits a moderate-rally view, while the plain call fits a conviction that the move could run much further.
Risks and assumptions
- The highest max profit is often the strategy with the lowest probability of profit -- the two numbers usually trade off against each other rather than one strategy winning on both.
- Capital required isn't just about affordability. Two positions with the same dollar risk can tie up very different amounts of buying power (a spread's defined risk vs. a cash-secured put's full strike reservation, for example).
- None of these numbers account for how liquid the actual contracts are -- a strategy that looks better on paper can be worse in practice if its legs have wide bid/ask spreads.
FAQ
Should I always pick the strategy with the higher probability of profit?
Not automatically -- it usually comes with a smaller maximum profit and a larger maximum loss relative to that profit. The right trade-off depends on how the position fits the rest of a portfolio, not on probability alone.
How does this app rank ideas for the same ticker?
Each idea gets a conviction score weighted across whether the trend agrees with its direction (40%), whether IV rank favors buying or selling here (30%), how liquid the contracts are (20%), and whether earnings fall inside the trade's life (10%) -- not a single number like max profit alone.
Is comparing strategies across different expirations meaningful?
Only with care -- a longer-dated position will generally show a larger dollar max profit and max loss simply because more time (and more possible stock movement) is involved. Comparing at the same or similar expiration is more apples-to-apples.
Primary references
Not hyperlinked deliberately -- verify current material directly on each organization's own site.
- The Options Clearing Corporation (OCC)
- Cboe Options Institute