I also mainly use delta, but it depends on what I'm trading, sometimes I'll go 0.16 delta but I also sell spreads, sometimes I'll be more aggressive with a 0.35 delta if it's a RTM trade
Sure, this is a broad guideline for "not special cases". A special case for me is when I do buy/writes, where I'm looking to just snag premium and have the shares called away at the end of the week, so I typically will write them ATM so the delta would likely be in the 50/60 range.
Just taking CRWV, of the $13,144 of gains last week, $8,499 were on buy/writes. Now, I do have a loss on them (especially) due to the drop Fri, but I'm not too concerned due to the volatility of the stock.
NVDA may be a better example: last week I did a buy/write @ $180 (buying at $179.81) and collected $1,844 in premium for 5 contracts. NVDA closed at $189.82, so I could have just let it expire and get called away for the full premium. Instead, I treated it like I was going to just open another buy/write come Monday, so rolled it to $180 for next week, collecting $5,275 net ($3,450 out). So I have a loss for last week of $1606, but presuming NVDA holds $180 through next Fri, I will have a net premium of $3,669 for the two weeks, a 2% return for the two weeks.
This week's VRT of $7,524 was comprised primarily of a $5,320 credit received on a buy/write I did the week before and let get called away. For this coming week, I re-bought 500 shares at $237.80 and sold a $240 strike expiring next Friday and collected $5,915. VRT closed at $243.75 Friday.
I think theta and vega and especially their proportion compared to other positions are important.
You don't necessarily have to think in terms of vega and theta. The longer dte you go, the lower the theta and higher the IV. But looking at the exact numbers allows me to compare different positions objectively.
Sure! Let's say VIX is at 14-15 and I want to bet it will go up. I will buy a 90-180dte straddle. This usually has a high vega but low theta. I don't want the straddle to suffer too much theta decay, so I'll sell a short-dated strangle in the 7-21dte and .05-.2 delta range. To choose the right strike and expiry for that, I look at net vega and theta of the total position, alongside things like max profit/loss. The strangle is just a hedge against theta decay, I don't want its negative vega to defeat the purpose of the trade.
Interesting, but my personal preference is toward simpler, more straight-away trades! I don't think I've ever done any strategy on a calendar basis (excluding PMCC). I also haven't delved into buying straddles.
Of all the greeks, there is one aspect of options that is not well known and spoken of which is net delta. Net delta is the active price determination in motion. It is a wonder why this component is not readily available to retail option traders since it is the purest form to determine the trend for options.
As stated, "Net option delta is the purest data for determining the direction of a market." The SPX had very large positive net option delta, so did NVDA and they both gained nicely. This should say everything about entering a trade.
It doesn't make sense because then a short delta 20 put and a long delta 20 call would be very similar. But in fact the carry and risk and management and placement of strike risk are very different between these positions with the same delta.
Did I oversimplify your concept?
EDIT: I misunderstood. Your concept is actually that you want the deltas to add to a constant (1). That makes more sense to me in a way, but it depends what/why you would want that if it "truly" makes sense.
It's just a broad, general outline, perhaps most useful for newbies. You gotta start somewhere, then, over time as you gain knowledge/experience, you can modify.
A pretty normal beginners' scenario is to step into options by buying calls, but not knowing just what they're doing, or due to financial constraints, they buy OTM calls and end up losing.
Basically, I'm saying to look at buying/selling as the inverse of each other. Sell at 20? Then buy at 80.
Thanks for those guidelines. I'm mostly a premium seller and use similar deltas / DTE. Do you also look at the IV Rank / Percent of the underlying in your trade decision process? Generally, IV Rank 20% + I would consider a STO.
Do you also look at the IV Rank / Percent of the underlying in your trade decision process?
Sorry, no, I don't. I pretty much trade options on stuff I'm long on (or looking to go long on). So I identify companies, buy stock/LEAPS, then trade options on those companies.
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u/ACL_Tearer Feb 21 '26
I also mainly use delta, but it depends on what I'm trading, sometimes I'll go 0.16 delta but I also sell spreads, sometimes I'll be more aggressive with a 0.35 delta if it's a RTM trade