Hey traders,
Down days don’t scare me — they pay me.
Here’s my simple timing rule that’s carried me through more “scary” Fridays than I can count:
- When a stock is having a down day (within an uptrend) and the market’s red, I look to sell a naked put. I’m getting paid to step in where others are nervous.
- Likewise, when a stock has had a big run higher (again, within an uptrend), that’s when I look to sell a covered call. I’m getting paid to let the heat cool off.
Why this works is simple: fear and greed inflate different sides of the options chain.
On selloffs, puts get puffed up… Meanwhile, when the market rips higher, calls get puffed up.
I’m not guessing direction — I’m letting other people’s emotions pay me.
A real example — and how I think it through
Right now I’ve got a naked put working on IBIT (Bitcoin ETF) at the 63 strike.
Why that strike? Because I always want to be paid at a level where I’m willing to own the shares if I get assigned. If price never gets there, great — I keep the premium.
If it does, I’ve entered at a discount and I can flip to covered calls the following week to keep the cash flow going.
Same playbook I use on stocks like NVDA after strong runs — I’ll sell covered calls against shares and let time decay do the work. No crystal ball required.
The “Friday Factor”
Fridays add two wrinkles:
- Expiration pressure. Premium melts fast. If I’m up big on a short option, I’m not shy about buying it back for pennies and resetting for next week. Small “give-ups” keep me out of dumb weekend risk.
- Headline drag. Weekends can bring surprise headlines. If a position will keep me up at night, I’ll reduce size or close it. There’s always another trade Monday.
Today I’ve also got a credit spread expiring.
My rule is the same: if the meat of the premium’s gone, I don’t hang around to squeeze the last nickel. Close, book it, move on.
Assignment 101
One more thing folks forget: assignment can show up late. Options desks finalize assignment up to 11:59 pm Saturday. That means you could get the email Sunday morning. It’s normal. Don’t panic.
If I’m happy to own the stock, I’ll take the shares and immediately look to sell calls against them. If I don’t want the stock, I’ll usually close the short put before the bell on Friday.
Your account, your call — but have the decision made before the close so you’re not guessing.
How to run this — step by step
- Pick your battleground. Liquid names with tight spreads.
- Let the day choose the side. Red day? Price the short put first. Big rip? Price the short call first.
- Choose strikes you can live with. Under support for puts; near orabove resistance for calls.
- Keep size safe. If getting assigned would stress you, it’s too big.
- Manage into the close. Up big? Close the short for pennies. On the fence? Decide before the bell.
You don’t need to predict the next headline or nail the bottom tick. Just let the market hand you the inflated side of the chain and collect your rent. That’s the job.
Trade well,
Jack Carter
P.S. Today’s down day? Just a blip. The trend is still bullish. Here’s my take why we’re headed higher!
