Lets go over a one that is a pet peeve of mine. The buy-write vs the synthetic buy-write. The buy-write is probably the most common spread people use options for. The trader will be long 100 shares of stock and short 1 call. The upside is limited to the strike price of the short call while the downside is to zero. Here is a chart of the risk reward of a buy write in Citigroup (C), selling the June 4.5 call at $0.31:
