STO (Sell to Open)
Opening a new options position by selling a contract. This is how we collect premium income.
BTC (Buy to Close)
Closing an existing options position by buying back the contract we sold. Used to lock in profits early or manage risk.
CC (Covered Call)
Selling call options against shares we own. If the stock stays below the strike, we keep the premium. Our primary income strategy.
CSP (Cash-Secured Put)
Selling put options with cash reserved to buy the stock if assigned. Used in the Wheel strategy to enter positions at a discount.
Wheel+ Strategy
Sell CSPs on quality names at drawdown entry gates. If assigned, sell CCs on those shares. May draw from general put capital (not just assignment cash). Subject to share caps and total commitment invariant.
Delta
The probability (roughly) that an option expires in-the-money. Delta 0.15 means ~15% chance the stock hits our strike. Lower delta = safer but less premium.
DTE (Days to Expiration)
How many days until the option contract expires. We typically sell 7-21 DTE for covered calls.
Strike
The price at which the option can be exercised. For covered calls, if the stock goes above this price, our shares get "called away" (sold at this price).
Efficiency (%)
Premium collected as a percentage of the stock price. Our target is 0.40-0.60% per trade, with a hard floor of 0.25%. Higher efficiency = more income per dollar of stock.
Premium
The cash we receive for selling an option. This is our income. One contract = 100 shares, so $1.50 premium = $150 per contract.
ITM / OTM
In-The-Money (stock above our call strike = risk of assignment) vs Out-of-The-Money (stock below strike = we keep shares + premium). We want OTM.
Assignment
When an option is exercised against us. For CCs: our shares are sold at the strike. For CSPs: we buy the stock at the strike. Not necessarily bad.
Coverage (%)
What percentage of our shares have calls written against them. Group A max 90%, Group B max 75%. Leaving some uncovered protects against upside we\'d miss.
VIX (Volatility Index)
The market\'s "fear gauge." Higher VIX = higher premiums but more risk. Below 25 = normal trading. Above 30 = reduce new positions. Above 40 = pause entirely.
Roll
Closing a current option and opening a new one with a different strike or expiration. Used to avoid assignment or extend a winning position. Best done for a net credit.
Group A / Group B
Ticker groups with different rules. Group A (MSFT, AMZN, META, NFLX): larger, less volatile, wider delta/DTE. Group B (NVDA, AMD, NET, SHOP): more volatile, tighter parameters.
Earnings Blackout
No new calls sold when expiration would cross an earnings date. Earnings cause big moves that could blow past our strike. Hard block in the system.
Circuit Breaker
If 4+ of 8 tickers are skipping due to momentum (big moves), ALL new STO paused for 24h. Signals broad market stress.
OPP_STO (Opportunistic STO)
Non-Friday trades when conditions are especially favorable. Higher efficiency bar (0.40% vs 0.25%), max 2 per week, and replaces the Friday STO for that ticker.