The exact rules behind every position I open
Most options traders lose money not because they pick bad stocks.
They lose because they have no rules. And when the trade goes against them, they make it up as they go.
I want to be straight with you: I’ve been studying and refining this system for a while now, but I only recently started running it live with real capital. The research is proven — tastytrade has been backtesting these strategies for over 20 years across thousands of trades and multiple market cycles. I took that foundation, built my own system around it, and now I’m deploying it in real time and showing you everything as it happens.
I didn’t invent the wheel. I’m just disciplined enough to follow the blueprints — and transparent enough to show you every trade.
Here are the 3 rules at the core of that system.
Rule 1: Delta 0.35 or lower.
Delta tells you the market’s implied probability that your option expires in the money. At 0.35, you’re giving yourself roughly a 65% chance it expires worthless — which is what you want.
This is also how you define your risk before you ever enter a trade. You’re not hoping the stock holds. You’re operating inside a probability framework — and you chose that framework before you pulled the trigger. That’s a level of discipline most stock buyers never even think about.
Go higher and you’re chasing premium. That extra $50 or $100 per contract costs you assignment risk you didn’t need.
0.35 is the ceiling. That’s where the math works.
Rule 2: 45 days to expiration.
Time decay — theta — is the engine behind this strategy. At 45 DTE you’re in the sweet spot where premium is rich and time is still working for you.
At 14 DTE or less, most of the decay has already happened. You’re accepting assignment risk for leftover premium. Not worth it.
45 days is the target. That’s where premium and probability align.
Rule 3: Close at 50% profit. Don’t get greedy.
“Why close at 50% when you could make 100%?”
Because that last 50% requires holding 3-4 more weeks of market exposure for an extra $50-75 per contract. The math doesn’t work.
Close at 50%. Redeploy the capital. Run the cycle again. Over 12 months that discipline is the difference between a strategy that compounds and one that frustrates.
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These three rules — 0.35 delta, 45 DTE, 50% close — are the foundation. But here’s what most options education gets wrong: they hand retail traders the same institutional metrics used by portfolio managers running hundreds of positions with full risk teams behind them. It creates complexity without clarity.
Our system is different. It runs on over 100 parameters — stock selection filters, volatility gates, position sizing models, roll criteria, pre-trade scoring. The analytics are serious. But the system is engineered so the output is clean. You don’t need to understand every input. You follow the rules, and the rules are built on the research.
Think of it this way: you don’t need to understand battery chemistry to drive a Tesla well. The complexity lives under the hood. The execution stays simple.
I’ll unpack all of it here — one issue at a time.
Right now I have 3 active positions across 3 stocks — NVDA, SPY, and AAPL. That’s intentionally light. The system uses volatility gates to control when capital gets put to work, and right now those gates aren’t fully open. VIX is elevated, and the rules say you don’t deploy full size into a nervous market. So we wait. When the gates open, position count goes up, premium goes up, and I’ll show you exactly what changes and why.
This newsletter is where I’m building the full picture — one issue at a time.
If someone you know trades options, forward this to them. They’ll thank you.
Until next time, keep the wheel turning.
— Keith
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The Income Wheel | theincomewheel.com
Every Monday. Real trades, real numbers, no fluff.
Not investment advice. I’m documenting how I personally trade — not telling you what to do with your money.