Selling Premium
Posts specifically about selling options premium as a strategy — when to harvest theta, what conditions must be met before selling, and how to manage the risk of being short options.
Get these in your inbox every market day.
Three conditions before I sell premium
Implied vol sitting above realized vol. Variance premium right there for the taking. Simple, right?
Three buckets, one question
Every options trade I take falls into one of three buckets. Delta. Theta. Vega.
Why I'm using flies instead of calls right now
Most traders see SPX stretched 1-2% below VWAP and reach for calls. In 30-vol, that's a terrible trade
One bad day is wrecking your vol reads
One spike to 120% a year ago is still messing with your reads today.
Your model doesn't watch the news
I spent 20 years on institutional desks. The most sophisticated risk decision I ever witnessed was a senior trader hitting pause.
You may be hedging away your edge
Implied correlation used to sit around 60% when I started running dispersion. If you liked a single-stock position, you had time.
Expensive doesn’t mean mispriced
Gold used to trade 15–20 vol. Divide implied vol by 16 and you roughly get the expected daily move. So 16 vol implies about 1% a day.
If it's a delta trade, stop calling it theta
Most iron condors I see aren't theta trades.They're delta trades in disguise...
High IV doesn’t make the trade good
If your first thought is “IV rank is high, this is attractive,” you’re missing the point
If your strategy has no veto, it isn’t a strategy
I don’t have a favorite trade. I have favorite conditions. And when those conditions aren’t present, I stop.