When to sell premium and when to stand aside: a regime checklist
Selling options is a good business on the right days and a terrible one on the wrong days. The strike matters less than the regime. Run these five checks before you sell.
1. Is there a trend? (ADX)
ADX below 20 means price is oscillating: sellers' territory. Above 28 means a trend is in force and every sold option on the wrong side will be tested. Between them, size down.
2. Is the range calm or coiled? (Bollinger width)
Narrow bands mean a quiet market, which is good, until they get too narrow: a squeeze precedes expansion. Sell when band width is in the middle of its recent history, not at the very bottom.
3. Where is price in its range?
Mid-range is ideal for a straddle. Near the top of a bearish structure, sell calls; near the bottom of a bullish structure, sell puts. Selling straddles at the edge of a range is how you get run over on the breakout.
4. Is premium rich?
Check the straddle percentile against past cycles. If you are not being paid above the median, the edge is thin and the gamma risk is not.
5. Is today quiet so far?
Compare the realised range with the expected move. A day already at 120% of expected is an expanding day; adding shorts into it is fighting the tape.
All five, automated
The VIP Indicator SELLER engine scores these five conditions on every closed candle, picks the side from market structure, prints the call and put strike on the chart, and prints STAND ASIDE when the score turns. Pair it with the RISK board and the day's plan writes itself.