Three Markets, One Rulebook: How I Sell Volatility

SPY closed almost flat at 767.40. A calm index often hides big moves in individual stocks, and that's where option sellers get paid.

I've run the Wheel for over five years. The idea is simple:

Sell a put and collect premium.

If assigned, sell covered calls above my cost.

When the shares get called away, start again.

How I match the tool to the market

Bullish: I sell puts on pullbacks, but only on stocks above their 200-day moving average. Delta stays between 0.15 and 0.25.

Sideways: This is the best regime for sellers. Time decay does the work, and if I'm assigned, covered calls keep collecting.

Bearish: I stop opening new puts. If the 200-day breaks, the trade fails my rules, however rich the premium looks. If you hold stock into a risky stretch, a protective put caps your loss at a price you pay upfront.

My sell-put rules

Volatility gates: I only sell when volatility is rich: IV Rank at least 40, IV Percentile at least 45, and implied volatility at least 1.2 times historical volatility.

Trend and calendar: The stock must be above its 200-day moving average, and I don't open anything within 7 days of earnings.

Strike: I take the lower of two anchors: the one standard deviation floor, or the nearest key moving average × 0.98. Expiries are 30 to 45 days out.

Size: 5% of the account for core names, 2% for everything else.

Exits: A take-profit order at 50% of the premium goes in when the trade fills. The stop is at 2 or 2.5 times the premium, with one roll at most.

My NVDA and BABA puts for June 20 both kept 100% of their premium. They were sold into fear, not hope.

Volatility isn't the risk. Selling it without rules is.

Educational only, not investment advice.

#CapitalizingonMarketVolatilitywithOptions