Monthly Expiry

Monthly options are more forgiving for beginners. They have lower gamma (positions change more slowly), more time for your thesis to develop, and more opportunities to adjust mistakes. The slower pace gives you time to learn without the pressure of rapid expiration. Most professional options education recommends mastering monthly before moving to weekly.

45 DTE provides more premium and more time, but ties up capital longer. 30 DTE captures the 'sweet spot' where theta starts accelerating while still having manageable gamma. For credit strategies, 45 DTE is often preferred for maximum premium. For directional debit strategies, 30 DTE balances cost with time needed.

Take it! If you're at 50% profit in week one of a 45 DTE trade, close it. You've captured your expected profit faster than anticipated. Don't be greedy waiting for more. Early profits free capital for new trades and eliminate remaining risk.

Absolutely not. In fact, most experienced traders rarely hold to expiration. They close at profit targets (50%) or loss limits (100-200% of credit) or at the 21 DTE management point. Holding to expiration increases gamma risk and assignment risk with diminishing benefit.

IV Rank shows where current IV falls between the 52-week high and low (0-100%). IV Percentile shows the percentage of days in the past year that had lower IV than today. They often give similar readings but can differ. Both indicate if options are relatively expensive or cheap compared to history.

Key questions: (1) Is your original thesis still valid? (2) Can you roll for a credit (not a debit)? (3) Are there better opportunities elsewhere? If the answer to #1 and #2 is yes and #3 is no, rolling makes sense. If your thesis is broken or rolling costs money, close and move on.

Generally yes, unless you're specifically trading the earnings event. The gap risk from earnings often exceeds the remaining premium. Close positions 2-3 days before earnings to avoid overnight gap. Exception: positions far OTM with little premium remaining may be worth holding.

Depends on account size and management capacity. A common guideline is 5-10 positions for active management. More positions provide diversification but require more attention. Ensure you can properly monitor and manage each position. Quality over quantity.

$5 wide wings on major indices (SPY, QQQ) or $5-10 on stocks is standard. Narrower widths increase return on capital but leave less room for adjustment. Wider widths require more capital but provide more protection. Match width to your capital and risk tolerance.

Assess: How close is it to your stop? Is the threat increasing or stabilizing? How much time remains? Options: (1) Close if you're uncomfortable regardless of stop level, (2) Tighten stop and monitor closely, (3) Roll the tested side out and away if credit available, (4) Let the stop trigger when hit. Don't add to tested positions.

Track total delta, gamma, theta, and vega across all positions. Set limits for each Greek based on portfolio size and risk tolerance. Example: Max absolute delta of 50 (equivalent to 50 shares per $100K), theta target of 0.05% of portfolio daily, vega within range where 5-point IV move is acceptable. Rebalance when Greeks drift outside limits.

When IV is rising (normal→elevated): Reduce position sizes, widen strikes, take profits earlier, reduce vega exposure. When IV is falling (elevated→normal): Maintain or gradually increase positions, existing short vega positions benefit, consider adding long vega. The transition periods are most dangerous - don't fully trust the new regime until confirmed.

Don't concentrate all positions in one expiration. Spread across 2-3 monthly cycles. Example: 40% in front month (30-45 DTE), 40% in next month (60-75 DTE), 20% in further out (90+ DTE). This prevents gamma concentration at any single expiration and provides smoother portfolio behavior.

Track correlation between positions - highly correlated positions amplify risk. Use sector and factor diversification. Monitor beta to major indices. In crisis, correlations approach 1.0 (everything moves together). Size the portfolio assuming correlated moves can occur. Consider explicit hedges when correlation risk is elevated.

Key predictive metrics: IV Rank at entry (>50% favors short premium), IV vs HV differential (IV>HV favors selling), trend strength (for directional), support/resistance proximity (for strike selection), days since last major move (mean reversion), and correlation regime (diversification effectiveness). Track these alongside trade outcomes to identify your edge.