MM45 - Selling Calls and Timeline Rules

This question keeps coming up in the community, so I wanted to touch on it once more. When you're selling calls, what is the proper time horizon based on which chart you're looking at? Let me break this down simply.

If you are trading off of a 4-hour IADSS chart, I look for +2 mean reversion. I look for a confluence sell signal. And I will sell a 30 to 45 day to expiration option. I will not go further out in time. The reason is time decay. I need my theta to be falling off a cliff at the end to help this trade work.

Now what if you're trading on a 1-hour IADSS chart? Your option window is 7 to 12 days to expiration. Think about it. A 1-hour chart is one fourth of a 4-hour chart. So the expiration window scales the same way. 30 to 45 days divided by four gives you roughly 7 to 12 days.

Here's the rule: there is no world where I will be selling a call greater than 30 to 45 days to expiration. Unless...

The One Exception: Collars

The only time you will hear me say I sold an option four months out or longer is when I'm selling a collar. That is a completely different strategy. Selling calls off of IADSS is a short-term income strategy. A collar is a hedging strategy. They are not the same thing.

Let me play this out with an example...