Three questions to ask first
- What do I think happens to the price? Up, down, or nothing?
- What's implied vol doing? Rich (elevated, about to crush), cheap (low, about to rise), or fair?
- Over what timeframe? Days, weeks, months.
Your answers point to a strategy. Here's a starting map.
Long call — you think the stock rises
Buy a call. Positive delta, positive gamma, negative theta, positive vega. Best when you expect a decent move and IV isn't already elevated. Downside: unlimited theta bleed if the stock does nothing.
Long put — you think the stock falls
Same shape as long call but flipped. Positive vega, so it also benefits if IV rises (which often happens on the way down).
Bull call spread — you think the stock rises modestly
Long a lower-strike call, short a higher-strike call. Bounded profit, bounded loss. Cheaper than a naked long call, but you cap your upside. Best when your view is directional but not aggressive.
Iron condor — you think the stock does nothing
Short a call spread + short a put spread. Positive theta (you collect decay), negative gamma (moves hurt), negative vega (IV rise hurts). Best when IV is elevated and you expect it to compress without a big move. Time decay is your friend.
Long straddle — you think something big is coming
Long a call + long a put at the same strike. Positive vega, negative theta. Best when you expect either a directional move or an IV expansion beforethe event you're trading. Losing trade: nothing happens and IV crushes at the same time.
How to use the Playground to pick
Build one of the presets. Set your ticker. Run the Time Machine with your expected scenario. Then run it again with the opposite scenario. If both outcomes leave you comfortable, you have a real edge. If one of them wipes you out, you're just betting on your view — size smaller.