💫 Practical option plays · Directional selling
Supertrend option selling
Sell OTM call when Supertrend is red; sell OTM put when Supertrend is green. Direction gives you the wrong-side to sell; theta and IV crush deliver profit.
Setup
- Chart: 15-min candles with Supertrend (10, 3)
- Choose weekly or monthly options depending on holding period (weekly for intraday-swing; monthly for multi-day)
- Target ~15-20 delta OTM strikes — enough premium to matter, far enough for cushion
Entry
Supertrend green (uptrend) → sell OTM puts. Supertrend red (downtrend) → sell OTM calls. Enter on the Supertrend flip candle's close.
Exit
Take profit at 40-60% of premium collected. Exit immediately when Supertrend flips against you — the directional thesis is invalidated.
Stop-loss
Supertrend flip = exit. Additionally, hard SL if option premium doubles from entry (typical convention for short options).
When it works
- Trending sessions with Supertrend holding for several hours
- Elevated IV (VIX > 15) providing juicy short premium
- Multi-day holds where theta compounds daily
When it fails
- Chop sessions with Supertrend flipping every 2-3 hours — no theta captured before the reversal
- Very low IV — premium too small to compensate for tail risk
- Ignoring the Supertrend flip — hoping for reversion is how accounts die
General trading rules that apply
Regardless of the specific setup, these apply to every strategy on this site:
- Never risk more than 2% of your account on a single trade
- Place a hard stop-loss before entering — no exceptions
- Journal every trade: setup, reason, outcome, one lesson
- After two consecutive losses, stop for the session
- Backtest and paper-trade for a month before deploying real capital
Every strategy here is an educational description of a widely-known technical setup. Past behavior does not guarantee future results. The chart above uses synthetic price data generated for illustration — real market behavior varies. Backtest, paper-trade, and size responsibly before risking real capital.