What is a single-leg option?

A single option or single-leg option strategy involves only one component option. You can either buy or sell a single option contract, which can be categorized as follows:

• Long Call: This gives you the right to buy the underlying stock at a specified strike price. You would use this strategy if you anticipate the stock’s price will rise before the option expires.
• Long Put: This gives you the right to sell the underlying stock at a specified strike price. You would use this strategy if you expect the stock’s price will fall before the option expires.
• Short Call: This involves selling a call option, which obligates you to sell the underlying stock at the strike price if the option is exercised by the buyer.
• Short Put: This involves selling a put option, which obligates you to buy the underlying stock at the strike price if the option is exercised by the buyer.

In options trading, a "leg" refers to an individual component of an options strategy. When you trade a single option contract, regardless of the number of contracts, it is considered a single-leg strategy. For example, buying one or multiple call options represents a single-leg strategy (long call) because it involves only one type of options contract.

To explore all the strategies we offer along with their descriptions, please click here.

Option trading entails significant risk and is not appropriate for all investors. Option investors can rapidly lose the entire value of their investment in a short period of time and incur permanent loss by expiration date. You need to complete an options trading application and get approval on eligible accounts. Please read the Characteristics and Risks of Standardized Options and Option Spread Risk Disclosure before trading options.