OptionsWizard — Mechanical Premium-Selling Options Strategies

The Core Philosophy

Four ideas do almost all the work. Everything on this site is a consequence of them.

1. Sell premium

Options are systematically priced for larger moves than actually happen — implied volatility runs richer than realized volatility over time. A consistent seller of options collects that difference. Volatility isn't the enemy; it's the product.

2. Probability over opinion

Pick trades by their probability of profit, not by a forecast about direction. Buying stock is roughly a coin flip. Selling premium when implied volatility is elevated can start at 60–90% probability of profit — before any view on the market.

3. Trade small, trade often

The edge is small per trade, so occurrences are the engine. A high number of small, consistent trades lets the law of large numbers do the compounding. One hero trade is gambling; a hundred disciplined ones is a business.

4. Manage winners early

Every trade gets its management plan before entry — where you'll take profit, when you'll exit, how you'll defend. No discretion, no hope, no "let me watch it for one more day."

The Flagship Formula

The standard mechanical setup for short-premium trades. Five numbers, memorized once, applied forever:

1

16Δ

Sell the 16-delta strikes — about one standard deviation out

2

45

Enter with ~45 days to expiration

3

50+

Only when IV Rank is above 50

4

50%

Take profit at 50% of max profit

5

21

Close or roll at 21 days to expiration — always

Why it works: large-sample backtests of 16-delta, 45-DTE short strangles on SPY show that managing winners at 50% of max profit produces roughly a 90% win rate with an average hold around three weeks — while exiting at 21 DTE cuts the largest losses roughly in half versus holding to expiration. The management is the edge.

The Playbook at a Glance

Nine structures, one doctrine. Click through for setup, timing, and management on each.

Short Strangle Flagship

Sell an out-of-the-money call and put at the same expiration. The core neutral premium trade — undefined risk, managed mechanically.

Full breakdown →

Iron Condor

The defined-risk version of the strangle: short call spread plus short put spread. Wings cap the loss; you trade some premium for sleep.

Full breakdown →

Cash-Secured Puts & the Wheel

Sell puts on stocks you'd own at the strike; if assigned, sell covered calls against the shares. Premium first, stock second.

Full breakdown →

Jade Lizard

A short put plus a short call spread, sized so the credit exceeds the call-spread width — removing all upside risk. Neutral to slightly bullish.

Full breakdown →

Covered Calls

Sell calls against shares you own. Dampens upside in exchange for steady premium and a lower cost basis.

Full breakdown →

Vertical Credit Spreads

Defined-risk directional premium trades. Same 50%-profit / 21-DTE management as the big structures, in a smaller package.

Full breakdown →

See all nine strategies, including ratio spreads, broken-wing butterflies, and diagonals →

New to Options? Start Here

Never traded an option? Follow this path — each step builds on the last.

1

📘

Options Basics — what a contract is, calls vs puts, strike/expiration/premium, and the risks beginners must know

2

αβγ

The Greeks — Delta, Gamma, Theta, Vega, Rho in plain language, and how sellers and buyers use each one

3

♟

The Playbook — nine premium-selling structures with exact setups and management rules

Start Here

Three pages that turn the philosophy into a tradable routine.

📏 The Mechanical Rules

Sixteen numbered rules: when to sell, how big, how much heat to carry, and what to never do. Print-worthy.

Read the rules →

📊 The Metrics That Matter

IV Rank, IV percentile, expected move, delta-as-probability, buying power — the dashboard behind every entry decision.

Learn the metrics →

⚠️ Mistakes & Loser Management

Oversizing kills more accounts than strategy choice. How to roll losers, why time exits beat P/L stops, and the classic blow-ups.

Study the mistakes →

The Trader's Toolkit

The books and desk gear behind this site. No courses for sale here — just the tools.

📘 Option Volatility & Pricing

Sheldon Natenberg

The options bible. Natenberg explains volatility, pricing models, and how market makers actually think — from basic spreads to advanced volatility trading. If you only read one book on options, this is it. Dense but readable, and every serious trader I know has a worn copy.

See it on Amazon →

📗 Options as a Strategic Investment

Lawrence G. McMillan

The encyclopedia of options strategies. McMillan documents every spread, hedge, and combination in exhaustive detail with real-world examples and risk graphs. It's the reference you reach for when building or dissecting any position. Not a cover-to-cover read — a lifetime desk companion for strategy builders.

See it on Amazon →

📙 Trading Option Greeks

Dan Passarelli

The Greeks, finally made practical. Passarelli translates delta, gamma, theta, and vega from textbook math into trading decisions — when to be long gamma, how theta really decays, what vega means for your P/L. The perfect companion to this site's Greeks page, written by a former market maker.

See it on Amazon →

🖥️ The Trading Desk

Ultrawide monitor, mechanical keyboard, a chair you can sit in for six hours — the unglamorous edge.

See desk gear on Amazon →

Affiliate disclosure: links above are Amazon affiliate links. As an Amazon Associate I earn from qualifying purchases — it costs you nothing and keeps this site free.

Wear the Wizardry

OptionsWizard tees and gear from the print-on-demand shop.

🧙 OptionsWizard Tees

Wizard-themed trading designs are coming to the merch shop — check back soon.

Visit the merch shop →