Options Framework Dashboard
Score a setup, pick the right structure, size it, and plan the exit — before you open the chain.
New to this? Hit any ? for a plain-English explanation of
what the question is actually asking and why it carries the points it does.
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out of 100
Answer every section
These weights are reasoned, not backtested. They encode sound
principles — don't fight the volatility regime, size on max loss, avoid event risk — but
nobody has shown that a 78 beats a 68 in your hands. Log 30 trades with scores, then check
whether the bands actually separate winners from losers and reweight what does the work.
Picks the right structure for your view. You tell it two things — which way you think
the stock is going, and whether options are currently cheap or expensive — and it returns the
structure that fits both.
Why both? Because direction alone does not decide the trade. The same bearish view can be expressed four different ways, and which one is correct depends entirely on what the options cost right now. Traders who pick a structure by direction alone end up buying expensive options and selling cheap ones, which loses money slowly even when the direction is right.
Why both? Because direction alone does not decide the trade. The same bearish view can be expressed four different ways, and which one is correct depends entirely on what the options cost right now. Traders who pick a structure by direction alone end up buying expensive options and selling cheap ones, which loses money slowly even when the direction is right.
Your read
How strongly you feel, and which way. Strongly means you expect a real move —
enough of one to be worth paying for. Mildly means you think it drifts that way.
Neutral means you think it goes roughly nowhere, which is itself a tradeable view
when options are expensive: you get paid for the stock doing nothing, and doing nothing
is most of what stocks do.
Are options cheap or expensive right now? IV Rank is where implied volatility sits
inside its own 52-week range. 0 means options are as cheap as they have been all year;
100 means as expensive.
It is not the volatility percentage itself — 40% is cheap for a biotech and expensive for a utility, and rank normalises exactly that. Buy options when this is low, sell them when it is high. Get the number from your broker; Thinkorswim, IBKR and Tastytrade all publish it.
It is not the volatility percentage itself — 40% is cheap for a biotech and expensive for a utility, and rank normalises exactly that. Buy options when this is low, sell them when it is high. Get the number from your broker; Thinkorswim, IBKR and Tastytrade all publish it.
0 — options cheap100 — options rich
Only matters if you end up selling puts. When you sell a put you are promising to buy
100 shares at the strike if the stock falls there — you get paid for that promise.
If you would genuinely be happy owning the stock at that price, a cash-secured put pays you to wait at a price you already like, and being assigned is a fine outcome. If you would not, cap the downside with a spread instead — otherwise you can end up owning something you never wanted, at a price that is now above the market.
If you would genuinely be happy owning the stock at that price, a cash-secured put pays you to wait at a price you already like, and being assigned is a fine outcome. If you would not, cap the downside with a spread instead — otherwise you can end up owning something you never wanted, at a price that is now above the market.
IV Rank is where implied volatility sits within its own 52-week range —
not the IV level. 40% is cheap for a biotech and expensive for a utility; rank normalises
exactly that. Take it from your broker, not from a chart indicator.
Turns your account size and risk tolerance into a number of contracts.
One rule underpins the whole thing: size on the maximum loss, never on what you paid. For a long option those happen to be the same number. For a credit spread they are not — and confusing them is how people end up taking triple the risk they intended while believing they were careful.
One rule underpins the whole thing: size on the maximum loss, never on what you paid. For a long option those happen to be the same number. For a credit spread they are not — and confusing them is how people end up taking triple the risk they intended while believing they were careful.
Inputs
The most you are willing to lose on any single trade, as a share of the account. This is
the number that decides whether you survive a bad run.
At 1%, ten losses in a row costs about 10% — annoying, entirely recoverable. At 5%, that same run costs roughly 40%, and you then need a 67% gain just to get back to where you started. Losing streaks are not unusual; they are a normal feature of any strategy with a win rate under 100%. Size for the streak, not the trade.
At 1%, ten losses in a row costs about 10% — annoying, entirely recoverable. At 5%, that same run costs roughly 40%, and you then need a 67% gain just to get back to where you started. Losing streaks are not unusual; they are a normal feature of any strategy with a win rate under 100%. Size for the streak, not the trade.
Debit = you paid money to open the position (a long call or put, or a debit
spread). Your maximum loss is simply what you paid — you cannot lose more.
Credit = you were paid to open it (a credit spread). Your maximum loss is the width between the strikes minus the credit you collected, which is always bigger than the credit. That is why this dropdown exists: the two are calculated completely differently.
Credit = you were paid to open it (a credit spread). Your maximum loss is the width between the strikes minus the credit you collected, which is always bigger than the credit. That is why this dropdown exists: the two are calculated completely differently.
Size on max loss, never on premium. A $5-wide credit spread
collecting $160 risks $340, not $160. That single mistake is how accounts get to a 3%
position while the trader believes it's 1.6%.
Produces the three numbers you should have written down before you clicked buy: where
you take profit, where you cut the loss, and the date you close no matter what.
An exit decided in advance is a rule. An exit decided while the position is moving against you is a feeling, and feelings are reliably worse at this than arithmetic. The targets differ for debit and credit positions because time decay runs in opposite directions for each.
An exit decided in advance is a rule. An exit decided while the position is moving against you is a feeling, and feelings are reliably worse at this than arithmetic. The targets differ for debit and credit positions because time decay runs in opposite directions for each.
Position terms
Debit = you paid to open, so you own the option. Time decay works against
you: every day that passes costs you money, and the rate accelerates near expiry.
Credit = you were paid to open, so you are short the option. Time decay works for you: every day that passes is money earned, provided the stock behaves.
Credit = you were paid to open, so you are short the option. Time decay works for you: every day that passes is money earned, provided the stock behaves.
DTE means "days to expiry" — how many calendar days remain until the option stops
existing. Enter the figure as at the moment you opened the trade.
It sets your manage-by date. Options lose value slowly at first and then very quickly in the last three weeks, so both the buyer and the seller want to be out before that final stretch — the buyer to avoid paying the steepest decay, the seller to avoid the sharply rising risk of a sudden adverse move near expiry.
It sets your manage-by date. Options lose value slowly at first and then very quickly in the last three weeks, so both the buyer and the seller want to be out before that final stretch — the buyer to avoid paying the steepest decay, the seller to avoid the sharply rising risk of a sudden adverse move near expiry.
Write these numbers down before you enter. An exit decided in advance
is a rule; an exit decided while the position moves is a feeling.
The reference card. Everything the other four tabs assume you already know, in one
place — what each spread is made of, when to buy versus sell premium, when to get out, and
the formulas behind every number the tools produce.
If a term on another tab is unfamiliar, it is almost certainly defined here. Each heading below has its own ? as well.
If a term on another tab is unfamiliar, it is almost certainly defined here. Each heading below has its own ? as well.
The four vertical spreads
A vertical spread means buying one option and selling another of the same type and expiry, at a different strike. Four combinations exist and these are all of them.
The pair that catches everyone: bear put and bull put use the same two strikes and share the same breakeven price, yet bet in opposite directions. Confusing them means taking a bullish position while believing you are short.
The pair that catches everyone: bear put and bull put use the same two strikes and share the same breakeven price, yet bet in opposite directions. Confusing them means taking a bullish position while believing you are short.
| Spread | Legs | Cash flow | Direction | Max profit | Max loss |
|---|---|---|---|---|---|
| Bull call | Buy lower call, sell higher call | Debit | Bullish | Width − debit | Debit paid |
| Bear put | Buy higher put, sell lower put | Debit | Bearish | Width − debit | Debit paid |
| Bull put | Sell higher put, buy lower put | Credit | Bullish / neutral | Credit received | Width − credit |
| Bear call | Sell lower call, buy higher call | Credit | Bearish / neutral | Credit received | Width − credit |
Two rules that make it permanent
Memorise these instead of the table above. Rule 1 has no exceptions in any vertical spread ever built. Rule 2 lets you work out whether something is a debit or a credit without looking it up: calls naturally express a bullish view, so the bullish call spread is the one you pay for; puts naturally express a bearish view, so the bearish put spread is the one you pay for.
1. The first word is the direction, always — bull means up, bear means down. The
option type tells you nothing about direction.
2. You pay for the view the option naturally expresses. Calls are natively bullish,
so the bullish call spread is the debit. Puts are natively bearish, so the bearish put
spread is the debit.
Volatility regime
Options carry a price, and that price is cheap or expensive relative to their own history. IV Rank measures where it sits in the last 52 weeks.
This is where most of the durable edge in options actually lives — not in predicting direction, which is hard and which everyone is attempting, but in refusing to buy when premium is rich and refusing to sell when it is thin.
This is where most of the durable edge in options actually lives — not in predicting direction, which is hard and which everyone is attempting, but in refusing to buy when premium is rich and refusing to sell when it is thin.
| IV Rank | Options are | Do | Theta |
|---|---|---|---|
| 0–30 | Cheap | Buy premium — long options, debit spreads | Against you |
| 30–60 | Fair | Debit spreads, directional | Roughly neutral |
| 60–100 | Rich | Sell premium — credit spreads, condors | For you |
Management
When to get out, fixed before you get in.
Debit positions: take profit at +50% to +100%, cut at −50%, and close by 7–10 days to expiry whatever has happened.
Credit positions: buy it back once you have captured half the credit, cut if the loss reaches the credit you took in, and close by around 21 days to expiry. Taking half is not timidity — the second half takes longer to earn and risks the entire width to get it.
Debit positions: take profit at +50% to +100%, cut at −50%, and close by 7–10 days to expiry whatever has happened.
Credit positions: buy it back once you have captured half the credit, cut if the loss reaches the credit you took in, and close by around 21 days to expiry. Taking half is not timidity — the second half takes longer to earn and risks the entire width to get it.
| Profit target | Stop | Time exit | |
|---|---|---|---|
| Debit | +50% to +100% | −50% of premium | By 7–10 DTE |
| Credit | 50% of credit | Loss = credit received | By ~21 DTE |
Formulas — per contract, 100 shares
K = the strike price. P = the premium, quoted per share. Width = the gap between the two strikes in a spread.
Everything is per contract, and one contract covers 100 shares. So an option quoted at $1.50 actually costs you $150, and a $5-wide spread has a width of $500. Forgetting the hundred is the fastest way to misjudge a position by two orders of magnitude.
Everything is per contract, and one contract covers 100 shares. So an option quoted at $1.50 actually costs you $150, and a $5-wide spread has a width of $500. Forgetting the hundred is the fastest way to misjudge a position by two orders of magnitude.
| Position | Breakeven | Max profit | Max loss |
|---|---|---|---|
| Long call | K + P | Unlimited | P × 100 |
| Long put | K − P | (K − P) × 100 | P × 100 |
| Short call, naked | K + P | P × 100 | Unlimited |
| Short put, cash-secured | K − P | P × 100 | (K − P) × 100 |
| Debit spread | Long K ± debit | (Width − debit) × 100 | Debit |
| Credit spread | Short K ∓ credit | Credit | (Width − credit) × 100 |
Hard fails — reject regardless of anything else
These are not point deductions, they are stop signs. Any single one of them rejects the trade however good everything else looks.
They exist because certain mistakes are not the kind you can offset with a strong setup elsewhere. Buying options the week of earnings, or selling premium when there is barely any to collect, loses money on average regardless of how clean the chart is.
They exist because certain mistakes are not the kind you can offset with a strong setup elsewhere. Buying options the week of earnings, or selling premium when there is barely any to collect, loses money on average regardless of how clean the chart is.
Chasing a level that just broke · buying premium at IV Rank above 80 · selling premium below IV Rank 20 · max loss over 5% of the account · buying into earnings inside 7 days · a binary event in the window · bid/ask wider than 10% of mid.
Educational tool, not financial advice. Liquidity Llama is not a
registered investment adviser. All figures assume expiry and exclude commissions, fees,
dividends, early exercise and assignment. One contract represents 100 shares. Options can
expire worthless, and short options can lose more than the premium received.