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The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Tighter spreads indicate better liquidity and lower execution costs.
⚡ KEY TAKEAWAY: Wide bid-ask = hidden cost on every trade. Stick to liquid underlyings where the spread is under 5% of the option price.
DTE (Days to Expiration)
Enter at 30–45 DTE for optimal theta/gamma balance. Close or roll at 21 DTE or 50% profit — whichever comes first.
Assignment
Not a disaster — it's the plan in the wheel strategy. If you only sell puts on stocks you'd own, assignment is just the next step.
Roll (Rolling)
Roll for a net credit or don't roll at all. Rolling for a debit just delays a loss. Best done before the position goes deep ITM.
Annualized Return
Looks impressive but is misleading if you ignore losses. Track actual account returns, not annualized returns on winners only.