"Through Discipline Comes Freedom"

Optimal Position Sizing and Strategy Adjustments

1. Optimal Position Sizing: Allocate a fixed percentage (1-2%) of your total capital per trade to reduce the risk of a single large loss. Use Kelly Criterion to balance exposure, maximizing growth while managing risk.

2. Risk/Reward Adjustment: Choose wider spreads (e.g., $10 instead of $5) to maintain a better reward/risk ratio. Aim for at least 1:3 or 1:4 to cushion losses.

3. Trade Entry Based on Volatility: Enter trades when implied volatility is high to collect more premium and maintain a greater distance from the underlying price. Use Delta to select strikes (e.g., 10-15 Delta).

4. Adjusting Win Probability: Target trades with over 90% win probability while ensuring adequate premium collection. Use technical analysis to confirm entry points, e.g., sell put spreads near support levels.

5. Hedging Strategies: Hedge large spread positions using long options or protective positions, especially during high-risk events like earnings.

6. Dynamic Stop-Loss & Profit-Taking: Implement a stop-loss at 1.5-2x premium collected. Close trades at 50-75% profit to limit exposure and trail remaining gains.

7. Diversify Across Expirations and Underlyings: Spread out expirations and diversify underlyings like SPY, SPX, and large-cap tech stocks to reduce concentrated risk.

8. Time-Based Approach: Sell shorter-term weekly spreads for higher time decay or aim for 2-3 week duration for a balance of premium and risk.