Farmer's Rules — Option Farm

Planting

Choose the Right Time to Plant

Use the Watch List Tool to screen candidates. Choose the right company in the right industry, then confirm all 4 indicators before selling a put.

📊 IV & IVR

When IV and IVR are high

Look for high IV and IVR to collect better premium. Low IV = thin margins.

IV IVR

📉 Momentum

RSI low & price pull-back is high

RSI below 30 and a high price pull-back from recent highs — selling into weakness, not chasing tops.

RSI < 30

🟢 Zone

Long term growth in green zone

Trade when the long-term trend is in the green zone. Avoid planting against the macro trend.

Green Zone

📅 Earnings Date

Not too close to earnings

Avoid selling puts close to earnings. Keep enough distance — earnings are sudden storms.

No Catalyst

Planting

Diversify the Crop

🥧 Distribution by Stock

✅ No single stock > 50% of total positions

AAPL

25%

MSFT

20%

NVDA

15%

TSLA

15%

AMZN

10%

Others

15%

📅 Distribution by Expiry Date

✅ Don't stack all positions in the same expiry week

This Week

10%

Next Week

15%

2–4 Weeks

30%

1–2 Months

25%

2+ Months

20%

Monitoring

Farmer Doesn't Harvest Every Day

📈 Holding Dashboard — Premium Growth Over Time

45 DTE3020100

X axis: Days to Expiry · Y axis: Premium Collected %

🌱 Observe premium growth with time passing by

💚 Let theta work — don't over-manage

🌍 Life is Bigger Than the Market

A calm mind makes better trading decisions.

🧘 Mental Health First

👨‍👩‍👧 Family & Friends

📚 Personal Growth & Learning

🚴 Hobbies & Things You Love

🌾 Keep mental health and do other meaningful things in life

Harvesting

Harvesting Early

🎯 Proactive — Take Profit Early

When profit reaches 50%–70% gain 50–70% PROFIT

When profit runs much faster than time FAST GAIN

When absolute dollar left in the option is low LOW $ LEFT

Don't wait for the last grain. Harvest early and replant.

🛡️ Preventive — Reduce Gamma Risk

2–3 weeks before expiry date to avoid the "gamma risk" zone.

4+ WEEKS
OUT
✅

⚠️ 2–3 WEEKS
OUT
EXIT ZONE

EXPIRY
WEEK
🔴

Gamma risk increases sharply as expiry approaches. Protect profits and reduce risk by closing at 2–3 weeks out.

🌱 Seed Selection (Stock / ETF)

I would be happy to own this stock at the strike price Cash-secured puts mean you may get assigned. Only plant in fields you want to own.

The stock is in an uptrend or at a strong support level Check the 50 DMA and 200 DMA on the stock itself, not just SPY.

No earnings, FDA decisions, or major catalysts within the expiration window These are sudden storms. If in doubt, don't plant or choose a later expiration.

Implied Volatility (IV) is elevated relative to its 52-week range High IV Rank (IVR > 30%) = fat premium. Low IV = thin margins.

🛡️ Risk Controls Defined

Position size ≤ 5% of total portfolio capital Never over-plant a single field. One bad storm shouldn't ruin the whole farm.

Total deployed capital remains ≤ 40% of portfolio Keep dry powder. You need cash to roll positions and seize better opportunities.

Profit target set: close at 50% of premium collected Harvest early. Don't wait for the last few cents.

Stop loss defined: close if option value reaches 2× premium received Decide your pain threshold before you plant, not during the storm.

Know your roll plan if the stock drops toward the strike Roll down and out? Accept assignment? Decide in advance.

Situation	Action	Why
Stock drops 5–8%, still OTM	⚠️ Watch closely, no action yet	Still in healthy range. Monitor daily.
Option value reaches 2× premium	🛑 Close the position (stop loss)	Pre-defined exit. Preserve capital.
Stock approaching strike, 21+ DTE left	🔄 Roll down and out for credit	Buy time, lower strike, collect net credit.
Assigned — stock put to you	🌾 Sell covered calls (the Wheel)	You own the crop now. Sell calls to recover cost basis.
Market-wide crash (VIX > 40)	❄️ Stop planting. Protect existing crops.	Winter has arrived. Wait for the thaw.

📜 4 Key Trading Rules