Educational use only — not investment advice. Full system in README.md. This page is a quick reference, not a substitute for the checklists.
① ASSESS → 3 TAGS · (detail: 01-market-assessment.md)
DIRECTION : bullish · bearish · neutral/range · no view (+ strong / weak)
↳ trend vs 50/200 MA · HH/HL or LH/LL · breadth · nearest S/R · "wrong if ___"
VOLATILITY : IVR <30 LOW (buy) · 30–50 MID · >50 HIGH (sell) · >70 V.HIGH (sell, size DOWN)
↳ IVR on THIS underlying · rising/falling · VIX level & term structure
CATALYST : none · earnings · macro (FOMC/CPI/Jobs/PCE) · other binary ↳ check ex-div too
The golden rule: HIGH IVR → SELL premium · LOW IVR → BUY premium. Direction sets the shape; IVR sets buy-vs-sell.
② SELECT — Direction × IVR matrix · (detail: 02-strategy-selector.md)
🟢 = defined risk · 🔴 = undefined/naked (L4)
| Direction ↓ \ IVR → | LOW (<30) — BUY | HIGH (>50) — SELL |
|---|---|---|
| Bullish | 🟢 Bull call debit spread · 🟢 Long call · 🟢 PMCC | 🟢 Bull put credit spread · 🟢 CSP · 🟢 Jade lizard |
| Bearish | 🟢 Bear put debit spread · 🟢 Long put · 🟢 Put backspread | 🟢 Bear call credit spread |
| Neutral / range | 🟢 Calendar / double calendar · 🟢 Long fly | 🟢 Iron condor · 🟢 Iron fly · 🔴 Short strangle |
| No view + expect a move | 🟢 Long straddle / strangle | 🟢 Iron condor (harvest IV) |
MID IVR (30–50): let direction + catalyst decide; either side works. Can’t trade a 🔴? strangle→condor · straddle→iron fly · naked put→CSP / bull put spread · naked call→bear call spread.
Catalyst override (earnings): compute expected move ≈ ATM straddle first → move > priced-in? long straddle/strangle. Move < priced-in? iron condor / iron fly / calendar (harvest crush). No edge? trade it after the crush. Never hold undefined short premium through earnings unless that is the plan.
③ SIZE · (detail: 03-risk-and-sizing.md)
Contracts = floor( Account × Risk% ÷ Max-loss-per-contract ) ← round DOWN
Per-trade risk: defined 1–2% (3% aggressive) · undefined: size off a STRESS move, ≤2–3× that
Per-underlying ~5% · per-sector ~15% · total portfolio at risk ~25% (standard tier; see 03-…)
Cut to ⅓–½ when: IVR>70 / VIX>30 · illiquid · event in the position · new strategy
Never average down a loser. Keep BP buffer (vol spikes raise naked BP).
④ PRE-FLIGHT — every box ✓ or STAND DOWN · (full: 05-checklists.md)
THESIS [ ] one-sentence thesis [ ] tags match "Use this when" [ ] I know "wrong if ___"
VOL [ ] IVR on THIS name [ ] buy/sell agrees with IVR [ ] IV trend favors me
CATALYST [ ] no surprise earnings/macro/ex-div before expiry (or deliberately trading it)
LIQUIDITY[ ] tight bid/ask [ ] healthy OI/volume [ ] LIMIT order at mid (never market a spread)
STRUCT [ ] DTE right (30–45 sell / 45–90 directional) [ ] strike deltas/width right
[ ] I know max profit / max loss / breakevens [ ] credit ≥ ⅓ width (verticals)
RISK [ ] max loss ≤ per-trade limit [ ] fits underlying/sector/total caps [ ] BP buffer
EXIT [ ] profit target set (GTC) [ ] defense/stop set [ ] 21-DTE reminder [ ] logged
30-sec say-out-loud: “Thesis ___, wrong if . Max loss $ (= __% acct). Take profit at ___, exit at ___. IVR ___, so I’m correctly a [buyer/seller]. No surprise event before expiry.”
⑤ MANAGE · (detail: ref-management-adjustments.md)
PROFIT credit spreads/strangles ~50% · iron condors 50–75% · naked 25–50%
debit/long → scale out INTO the move, don't hold to expiry hoping
TIME manage/roll short premium by ~21 DTE (dodge gamma risk); never hold naked into expiry wk
ROLL only for a CREDIT; roll untested side toward price; don't roll just to avoid a loss
DEFEND short strike tested → take untested-side profit / roll in / or close if thesis broken
STOP use a credit-multiple (exit ~2× credit) or thesis-invalidation, not a tight price stop
ASSIGNED short put→long shares (sell calls / Wheel) · short call→short shares (cover) · spread leg = capped
Key defaults at a glance
| Thing | Default |
|---|---|
| Premium-selling entry | 30–45 DTE · short strike 16–30Δ · profit 50% · manage 21 DTE |
| Directional/debit | 45–90 DTE swing · LEAPS >180 DTE ~70–80Δ for stock replacement |
| Credit worth taking (vertical) | credit ≥ ~⅓ of width |
| IVR bands | <30 low · 30–50 mid · >50 high · >70 very high |
| Approval tiers | L1 covered/CSP/protective · L2 long · L3 defined multi-leg · L4 naked |
| Settlement | SPX cash/European/no-early-assign/1256-tax · SPY/QQQ/stocks physical/early-assign risk |
See payoff shapes → ref-payoff-diagrams.md · full loop → 00-daily-workflow.md
Power and Pelf 