How can I improve my process?
I have been selling options for about 12 months now and have finally started to get a hang of it. Here is the process I follow. Any thoughts on how I can improve or tighten up the process?
SIZE — Total notional under 135% of capital (what I've put in plus what I've made). No more than 45% of that in credit spreads, because a dollar of spread notional is a dollar gone, while a dollar of put notional buys me the stock.
STRIKE — IV above 60%, sell the 0.13–0.15 delta. IV below 60%, sell the 0.18–0.20. High-IV names pay enough to sit far out; low-IV names don't.
DURATION — 14–21 days.
MIX — Only trade names with a market cap of over $50B to eliminate junk. 60/40 high-IV to low-IV. An example would be 60% position in NBIS, BE, MU, ALAB; 40% position in CRWD, PLTR, DELL, TSLA.
EXIT — Close at 50% of the credit and recycle the capital. If position is threatened, roll down and/or out. Never close at a loss.
Thanks for reading.