Guides

Option-selling strategies, measured.

Plain explanations of the strategies people actually run, and lessons from our own research, with what years of real option quotes say about them, losing trades included.

Guides

  • Cash-secured puts, measured

    What a cash-secured put is, what happens when one is assigned, and what years of real option quotes say it earns once the losing trades are counted.

  • The wheel strategy, measured

    Sell a cash-secured put, take the shares if assigned, sell covered calls until they are called away, repeat. Here is how the parts behave on real quotes, and where the wheel quietly goes wrong.

  • Put credit spreads, measured

    A short put with a cheaper long put below it: less premium, a fixed worst case, and far less cash tied up. Ten years of QQQ and SPY quotes say it is the stronger structure, with two losing years.

  • The best ETFs for the wheel, measured

    Which funds paid a put seller over ten years of option quotes, ranked by return per trade with the losing trades counted, and why the highest premium is rarely the best ticker.

  • How to sell puts for income, step by step

    A plain walk-through of selling a put: picking the stock, the strike and the expiry, sizing it so one bad week cannot hurt, and what to do at expiry. With what our replays say about each choice.

  • Covered call vs cash-secured put

    They look like opposites and behave like twins. Here is why the two positions carry almost the same risk, and when the choice between them is really about something else.

  • What happens when a put is assigned

    Assignment explained plainly: when it happens, why early assignment is rarer than people fear, what it costs, and how often it happened in our replays.

  • Delta for option sellers: what 25-delta means

    Delta in plain terms for people who sell options: what it measures, why traders read it as a rough probability, and what a 25-delta put did in our replays.

  • How to pick a strike when selling puts

    Strike selection for put sellers, step by step: the trade-off between premium and safety, why delta is the usual yardstick, and why size matters more than the strike.

  • Best expiration for selling options (DTE)

    How many days to expiration to sell: why weekly options look attractive, and what our replays measured for short-dated versus 30 to 45 day puts.

  • Rolling a put: when and what it costs

    What rolling a short put means, why it feels like a fix, what it actually costs, and what our replays say about defending a position versus letting it run.

  • Closing short options at 50% profit

    The 50% profit rule for option sellers: why it is popular, what it did for cash-secured puts in our replays, and why it hurt put credit spreads.

  • Implied volatility and IV rank for sellers

    What implied volatility and IV rank mean for people who sell options, the variance risk premium behind the trade, and why selling only when IV looks high did not help in our data.

  • Theta decay explained for option sellers

    Theta in plain terms: how time value melts, why sellers like it, and why it is a payment for carrying risk rather than free income.

  • Buying power for cash-secured puts vs spreads

    How much capital a cash-secured put and a put credit spread tie up, why the return on that capital differs so much, and what each did in our replays.

  • What is a covered call?

    Covered calls explained plainly: how they work, what you give up, how they fit the wheel, and what our replays say about the related trades.

  • Iron condors, measured

    What an iron condor is, why its win rate looks better than its results, and what replays of index condors on real quotes found once both sides were counted.

  • Call credit spreads (bear call spreads), measured

    How a bear call spread works, where its risk sits, and why short upside lost money on index funds in every form our replays tested.

  • Bull call debit spreads vs put credit spreads

    Both are bullish, defined-risk trades. One pays you up front and one costs you up front, and on years of index data they turned out to be very different bets.

  • The poor man's covered call, measured

    How the poor man's covered call works, what it really is underneath, and how it compared with simply holding the same exposure in stock on years of real quotes.

  • 0DTE options for sellers, measured

    Same-day expiry options promise fast decay and daily recycling. Here is what a replay of hundreds of SPX same-day spreads found once real prices, fees and gap days were counted.

  • Selling options on leveraged ETFs

    Puts on TQQQ and other leveraged ETFs pay fat premiums. Here is what that premium bought in our replays, and why three tickers on the same index are one bet.

  • Position sizing for option sellers

    Contract count tells you nothing about risk. How to size short options by max loss, why Kelly overshoots, and what share of equity at risk kept drawdowns survivable in our replays.

  • How to backtest an options strategy honestly

    Most options backtests flatter the strategy. The four habits that kept ours honest: real bid and ask fills, no look-ahead, intervals that respect clustering, and judging on the lower bound.

  • Options trading journal: win rate vs expectancy

    Why a high win rate says little about an option seller's results, what to record for each trade, and how to read the journal once it has enough rows.

  • Selling puts in a bear market

    What happens to put selling when the market trends down, what our replays found below the 200-day moving average, and why a stand-down is insurance rather than an edge.

  • What is a put option? A plain explanation for sellers

    A put is a contract that pays when a stock falls. Here is what the buyer gets, what the seller owes, and why most people who learn options start on the selling side.

  • Options paper trading: how to test a strategy honestly

    Paper trading is only useful if you decide the rules and the success test before you look at results. How to do that for option selling, and the traps that make a paper record meaningless.

  • Connect an AI agent to your Studio

    Use Claude, ChatGPT, Cursor or any MCP client to draft, test and track your paper strategies by asking in plain words.

  • Studio MCP server reference

    Every tool, prompt and resource the Last Vesper Studio MCP server offers, what each one does, and the limits that apply. For people connecting Claude, ChatGPT, Cursor or another MCP client.

Lessons from our research

  • Stop-losses on credit spreads did not work

    We replayed every exit rule we could think of on put credit spreads. Holding to expiry beat all of them, because the big losses arrive as gaps, not as slow drifts a stop can catch.

  • Why an 86% win rate is not the edge

    Contract count tells you the scale of a loss, not its size relative to your wins. In our paper book the average loss was twice the average win, so a seller needs two wins for every loss just to break even, and the margin above that is thin.

  • Ten correlated tickers are about two bets

    Selling puts on many tickers feels diversified. We measured how many independent bets a typical put-selling watchlist really holds, and the answer was about two a week.

  • Rich implied volatility did not pick better puts

    Selling puts when implied volatility is high relative to realized volatility sounds like the obvious filter. On our own book it had essentially zero correlation with the outcome, and the richest quartile had the lowest win rate.

  • The 200-day moving average gate is insurance with a price

    Standing aside when the index is below its 200-day average is the most common rule in premium selling. Our ten-year replay says it costs a little in normal years and its evidence rests on one bear market.

  • Regime timing did not beat holding the spread

    We priced nine option structures on the same days and asked whether a regime model could move money between them. Out of sample, none beat holding a put credit spread all the time.

  • Weekly puts lost where 30 to 45 day puts earned

    Selling short-dated puts promises faster premium. In our forward paper book the 7 to 14 day window was negative, while the 30 to 45 day window was the only one with a positive lower bound.

  • Same-day SPX credit spreads did not survive the test

    Zero-days-to-expiry SPX credit spreads promise daily premium, cash settlement and no assignment. On 600 days of real intraday quotes, the edge per trade was tiny and the drawdowns were several times the collateral.

  • Selling puts before FOMC, CPI and jobs reports

    Should you avoid selling puts into scheduled macro events? We tested the three big ones. FOMC was the opposite of what most people expect, CPI did nothing, and the jobs report was the one to respect.

  • How much of your account to put at risk selling spreads

    Ten years of put credit spread results, resampled month by month, give the odds of a 20% drawdown at each fraction of equity at risk. The table is steeper than most sellers expect.

  • Paper results must use your real exit rule

    The same set of short puts can look like the best strategy or a losing one depending on which exit the paper record assumes. We learned this by getting it wrong once.

  • Thin premium or broken strategy: how to tell

    When a put-selling strategy starts earning less, the cause is usually that the market is paying less, not that the strategy stopped working. We built a test that separates the two, and its first reads mostly said regime.