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The playbook behind every journaled trade.
Every concept below is used in the trades on this page. No paid courses, no hype. Just the four ideas that drive defined-risk premium selling.
01 IV Rank & IV Percentile: is vol cheap or rich?
Implied volatility rank (IVR) tells you where today's IV sits within its own 52-week range (0-100); IV percentile (IVP) is the cleaner 0-100 stat that answers "the market is pricing options as if the price will move 21% of the last 100 days." The single most important number for a premium seller.
| IVP band | Read | ThetaForge action |
|---|---|---|
| 70-100 | Extreme | Rich premium, strong sell-premium edge |
| 40-70 | Elevated | Sell premium with normal sizing |
| 20-40 | Subdued | Slim edge, consider debit (long) structures |
| 0-20 | Cheap | Premium buying (debit spreads) window |
02 Expected Move: where will it land?
The expected move is the 1-standard-deviation range the market itself is pricing, ~68% probability, derived from ATM straddle + IV over the trade horizon. If you sell a credit spread whose short strike sits outside the expected move, you're selling insurance for a move the market already priced as unlikely. That's the core of a high-probability trade.
Each journal card shows the expected move at entry (e.g. exp move ±2.4%) next to the strikes, so you can see whether the short wing was outside the move.
03 Probability of Profit (POP) & Delta
Delta approximates the probability a leg finishes in the money. A 16-delta short wing roughly means ~84% odds the option expires worthless. Option selling isn't about being right every time. It's about high POP with defined risk so a 16% loss streak is survivable and expectancy stays positive.
| Short delta | ~OTM probability | Typical use |
|---|---|---|
| 30 | 70% | Aggressive credit |
| 16 | 84% | Sweet spot (Tastytrade) |
| 10 | 90% | Defensive / large size |
04 Risk, Expectancy & Drawdown: the honesty math
Win rate alone lies. What matters is expectancy (average net P&L per closed trade) and R-multiple (net P&L ÷ capital at risk). A 90% win rate with 3R losses is a losing system; a 55% win rate with 2R winners compounds. The journal shows both, plus drawdown from peak, because a trader who hides drawdowns is hiding the truth.