Strategy: Sell n Calls, ≤ 56 DTE
Buy n Calls, Lower Strike, ≥ 90 DTE
Example:
Price Chart: Uptrending
Current IV% ≤ 20%
IV Rank: ≤ 30
Trade: Buy n ATM or slightly OTM long-term calls; sell n calls several strikes above.
Typical Strike Deltas:
Long Call ≈ 0.55 to 0.45
Short Call ≤ −0.25 (higher strike, shorter expiration)
Goals: Rally moves long calls ITM for profit; short calls are rolled two or more times for additional premium.
Manage: If short calls remain OTM, collect more premium by rolling out to the next expiration and, if necessary, up to a higher strike. Repeat until long calls move ITM and sell for profit. If underlying drops, close the trade.
Profit: Close when premium is greater than or equal to 30 percent (price near peak of plotline).
Loss: Close when premium is lesser than or equal to 8 percent (in case of a price drop).