Four principles
Fixed
The same four for every options position, whichever structure is chosen. They decide what we are willing to trade at all.
Principles and methodologies
A principle decides what. A framework decides how.
Options
One six-stage framework
Run every time
Market view through to exits. It decides how the principles become a specific options strategy.
Options principles
Four positions we do not argue about.
What we trade
What it rests on
What we trade
01Buying and selling are both trades
Neither is superior, and selling is not the mirror image of buying.
Treating one trader’s loss as the other’s gain is where most options thinking goes wrong, and it leaves the trader permanently undecided about which camp to belong to. We use both. Which one appears in a recommendation is decided by the evidence, not by allegiance.
02Leverage is leverage
It is neither a virtue nor a vice.
Whether it helps or harms is settled entirely by how it is used — the size taken, and the loss accepted before the position is opened.
What it rests on
03The Greeks are not the market — price is
They describe how a position will behave; they do not say where the underlying is going.
The Greeks are derivatives of price. They inform a decision we have already framed on the chart. A position taken on the Greeks while the price action is ignored has the relationship backwards.
04Chart reading is under-rated
No position of ours is taken without the price action supporting it.
Options are the sharpest instrument available for tactical positioning, whether the purpose is speculation or a hedge, and what makes them precise is the chart.
Options methodology
Two kinds of Options recommendation.
One follows a view on the underlying, the other follows an event. Each is chosen a different way, and every recommendation says which it is.
View-driven
The matrix
Where the underlying is going, and what volatility is expected to do while it gets there.
View on the underlying
Bearish
Cautiously bearish
Neutral
Cautiously bullish
Bullish
Volatility
Rising
Steady
Falling
Event-driven
Defined events
The event, not the trend, is the reason for the position, and the date it resolves is known in advance.
- Earnings
- Macroeconomic announcements
- Company-specific news
- Special situations
- Binary outcomes
The base both kinds rest on
One decision sequence, every time.
Each stage has to be answered before the next one is reached, and the recommendation is only published once the last one is. Whether the position came from the matrix or from a dated event, it has been through all six.
- 01
Market view
The thesis, and what would invalidate it.
- 02
Time horizon
Holding period, catalyst timing, expected path.
- 03
Volatility and events
The pricing environment and the calendar.
- 04
Payoff structures
Suitable families, trade-offs, maximum risk.
- 05
Portfolio and execution
Liquidity, capital use, diversification.
- 06
Adjustments and exits
Follow-up actions and exit conditions.
What it produces
A suitable strategy family, defined-risk and payoff context, expiry and execution considerations, and a follow-up plan before publication.
See what the Options plan includes.
The recommendations this framework produces, what each one contains and the follow-through after entry.
Options involve risk and are not suitable for every investor. Read the risk disclosure before acting on market information.