Every day that goes by bleeds off more of the option\u2019s premium at an exponential rate.<\/p>\n

However, that rate of decay is directly impacted by IV.<\/p>\n

So, if IV is higher, the amount that decays each day is higher.<\/p>\n

When you graph it, It looks something like this:<\/p>\n

<\/p>\n

The blue and green curves show lower rates of time decay because IV is lower, while the red and purple curves show higher rates of time decay because of higher IV.<\/p>\n

By selecting options with shorter durations, we limit the impact of time decay and implied volatility.<\/p>\n

At the moment, that\u2019s a good thing because IV is higher on most stocks than it has been in years.<\/p>\n

Naturally, that means I need my setups to match.<\/p>\n

So, instead of looking for potential trades on the 195-minute or daily chart, I\u2019m going to focus on the 60, 30, 15, or even 5-minute chart setups.<\/p>\n

With the moves happening so sharp and fast, I don\u2019t need many wins because the ones I hit will deliver bigger payoffs.<\/p>\n

3. Consider Playing Both Sides<\/strong><\/p>\n

Most of the time, I will play call options.<\/p>\n

However, when markets get whippy, I may add in put options to hedge my bullish trades.<\/p>\n

This reduces my portfolio risk while still allowing me to play high-quality setups.<\/p>\n

There are a few ways to go about this.<\/p>\n

First, you can do offsets in the same sector. For example, if I\u2019m long META, I could buy a put on GOOGL. This is probably my least favorite approach since these stocks often trade together.<\/p>\n

The second method is to bet against the indexes. In this case, if I\u2019m long META, I can buy a put on the SPY or QQQ as a hedge. This works well when I\u2019m trading stocks that aren\u2019t correlated to the broader market, like LMND or WM.<\/p>\n

The third method is to simply look for high-quality bearish setups regardless of their relationship to the long position. In this scenario, I\u2019d look for an A+ bullish and A+ bearish setup on two different stocks and let the one act as a hedge to the other. This is a pure play on my strategy, but may not give me an effective hedge.<\/p>\n

Be Selective<\/strong><\/p>\n

The one thing I want you to remember is this\u2026<\/p>\n

Trading is an individual occupation. Don\u2019t judge your performance based on how well others or the market are doing.<\/p>\n

One of the worst things you can do is assume that just because the market popped or dropped 1,000 points means you missed a trade.<\/p>\n

You could predict a move almost to the moment and still not have a proper risk management setup.<\/p>\n

Making money in the market is hard. Keeping it is even harder.<\/p>\n

That\u2019s why you want to carefully select when and where to make your move.<\/p>\n

A lot of traders struggle with this for one main reason – confidence.<\/p>\n

When you\u2019re not confident where and how to make a stand, you\u2019re more likely to mess it up or miss it entirely.<\/p>\n

Don\u2019t let that happen to you.<\/p>\n