- Bear Call Ladder (also Short Call Ladder)
- Call Ratio Backspread
- Long Call
- Long Combo
- Long Guts (also Guts)
- Long Straddle (also Straddle)
- Long Strangle (also Strangle)
- Protective Put (also Married Put)
- Synthetic Call
- Synthetic Long Stock
- Synthetic Long Straddle
Strategy Groups with Unlimited Profit
Many strategies in the above list are quite similar. In fact, we can classify them all in a few groups.
The simplest strategy with limited risk and unlimited profit is a plain and simple long call option. Its risk is limited to the premium paid, while profit is theoretically infinite as there is no cap on how high the price of most underlying assets can go.
Other strategies from the list are ratio spreads and ladders, which include both long and short call options, but the number of long call contracts is greater than the short ones. As a result, these positions are net long call options and can profit from the unlimited upside potential when underlying price goes up.
Long option combinations are some of the most common strategies with unlimited profit. These are long both call and put options, but it is the long call side which creates the unlimited profit potential.
For instance, a synthetic long straddle position can be created from a combination of short underlying and long call options.
What Causes Unlimited Profit Potential
All these strategies have one thing in common: the theoretically unlimited profit applies to an upside move in underlying price.
Generally, for a position to have unlimited potential profit, it must be either net long call options or net long the underlying asset. Either allows the position's value to infinitely increase as underlying price keeps rising.
Bearish Strategies with Almost Unlimited Profit
There are some bearish strategies, such as long put, which can possibly reach very high profit when underlying price falls to zero. However, because most underlying assets can't have negative prices, potential profit of these strategies is still limited by zero underlying price.
Generally, these are strategies which are net long put options or net short the underlying asset.