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The premium received divided by the capital at risk. For a $5 wide credit spread collecting $1.50, ROC = $1.50 / $3.50 = 42.9%. Compare ROC across setups to find the most efficient use of capital.
⚡ KEY TAKEAWAY: ROC tells you how hard your capital is working. Compare ROC across different setups on the same stock to find the most efficient trade.
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.