Tasty Cheat Sheet

Must collect at least 1/3rd of the width as credit

$1 = 0.33
$2 = 0.66
$3 = 1.00
$5 = 1.66
$10 = 3.33

50%

Option 1 - Roll

Try to roll to a later expiry:
1) For a CREDIT
2) Without increasing the width
You may move the strikes as long as you still collect a credit

Option 2 - Hold

Your max loss is already defined, so wait for expiration

Long Strike ITM, Short Strike OTM
(Straddling the current price)

50%

Option 1 - Roll

Try to roll to a later expiry:
1) For a CREDIT
2) Without increasing the width
You may move the strikes as long as you still collect a credit

Option 2 - Hold

Your max loss is already defined, so wait for expiration

2x OTM Short Spreads

Collect 1/3 the width of the spreads

$1 = 0.33
$2 = 0.66
$3 = 1.00
$5 = 1.66
$10 = 3.33

50%

$3-5 between spreads

Can manage same as verticals, plus

Can roll the untested side. Will reduce risk AND profit range

$10-20 between spreads

Roll the untested side for a credit to reduce risk

Dance Floor

If IVR is high keep open, otherwise close and move on

Low IVR environment

Place trade for a debit

Buy an ITM option in the further dated month

Sell an OTM option in the nearer dated month

Do not pay more than 75% width of the spread

$1 = 0.75
$2 = 1.50
$3 = 2.25
$5 = 3.75
$10 = 7.5

50%

Option 1 - Roll for credit

Roll the short strike forward for a credit (e.g. weekly)

Option 2 - Roll and in

Roll the short strike forward and closer to the long strike, shrinking the width of the spread

Make sure that total debit paid does not exceed width of spread or you lock in a loser

Option 3 - Roll to the far month

Roll the short strike to the same month as the long strike

Dance Floor

As per Option 2 above

High IVR environment (>50 ideally)

Minimum credit - $1

Ideally around 16 delta (1 std dev)

Usually on a liquid ETF rather than a individual security so that management does not interfere with earnings

50%

If the price is between your strikes ..

Do nothing

When strikes are tested..

At any time you can roll out in time. Usually around 45 DTE stay in current cycle and around 21 DTE consider rolling.

Try each step in turn..

1) Roll the untested side - reduce your delta by 30-50%

2) Roll the untested side into a straddle

3) Go inverted:
if rallying roll the put above the call
if falling roll the call down below your put
consider moving to the ATM strike (but not always) as it has the most extrinsic value
credit received must be greater than the width of the inversion

Dance floor

If IVR is still high keep it open, otherwise close

High IVR environment (>50 ideally)

ATM Short Put and Call

Breakeven = Strike +/- credit received

25%

If the price is between your break-even points ..

Do nothing

When strikes are tested..

If you're around 45 DTE..

Go inverted:
if rallying roll the put above the call
if falling roll the call down below your put
consider moving to the ATM strike (but not always) as it has the most extrinsic value
total credit received must be greater than the width of the inversion

If you're closer to 25 DTE then roll out. Optionally also invert.

Losers

When it would cost 3x or 4x (you choose) your credit, buy to close and walk away.

e.g. Received credit $7? BTC at $21 or $28

Dance floor

If IVR is still high keep it open, otherwise close

1x Long option ATM (or slightly OTM)

2x Short Options further OTM

Must be for a credit

Greater width = greater max profit, lower credit

Collect significant credit on order entry

Tasty prefers Put ratio spreads (bullish bias)

At your discretion, 60-70%ish

If stock is above short strike..

Do nothing

Otherwise..

Check the value of the long vertical spread. If it is near max value then take it off. E.g. $1 wide pay about $0.80. Then manage like a short put.

If not..

Option 1 - Sit and wait

Option 2 - Roll out in time

Losers

When it would cost 3x or 4x (you choose) your credit, buy to close and walk away.

e.g. Received credit $7? BTC at $21 or $28

Dance floor

Roll out in time

If IVR is still high keep it open, otherwise close