Credit spreads are popular for a reason. They look elegant on paper: defined risk, high probability, steady income. I trade them myself - regularly. But over the years, one conviction has become very clear to me: I do not like selling credit spreads (or iron condors) on assets I’m not willing to own.
This is not a theoretical opinion. It comes from real trades, real stress, and real tail-risk events.
A few years ago, I was actively trading 0 DTE SPX options.
Was it fun? Absolutely. Was it exciting? Without question. Was it powerful? That’s where things get murky.
0 DTE strategies feel surgical and sophisticated. You can stack small wins, day after day. But with time, I realized something uncomfortable: I could not clearly explain whether the strategy had a durable edge or whether I was simply harvesting volatility until the market decided otherwise.
SPX is cash-settled. No assignment. No ownership. No plan B. When you’re wrong, you’re just wrong. That experience planted the first seed of doubt about premium selling without an ownership fallback.
I had a similar experience trading options on futures, particularly gold. For a while, it worked — until it didn’t. The problem wasn’t the strategy itself; it was the structure. Futures options offer leverage and efficiency, but unless you’re prepared to hold or roll the underlying exposure, the entire setup feels asymmetric in the worst way. When volatility expands or correlations break, you’re forced to exit at the market’s terms.
Why I Stopped Selling Put Options on Micro Gold Futures (MGC)
Without the ability - or willingness - to hold the underlying asset, premium selling starts to feel structurally wrong. You’re harvesting small, consistent gains while sitting on a risk profile that has no graceful failure mode.
That’s not risk management. That’s deferred realization.
In our private stock portfolio, I actively sell credit spreads - mostly on NVDA. But there is a crucial difference in how I approach them.
Every NVDA credit spread I sell has a predefined escalation path:
- Primary plan: Let the spread expire worthless.
- If challenged: Roll out and forward for a net credit.
- If pressure persists: Accept stock assignment.
- After assignment: Switch to a wheel strategy, selling covered calls.
I’ve been trading credit spreads on NVDA for almost a year now. I’ve rolled positions many times, often aggressively, and so far I haven’t taken a single assignment. Not because I’m avoiding it — but because rolling has remained rational and capital-efficient.
What matters more is this: I’m fully prepared to take assignment at any time.
NVDA is not a random ticker to me. It’s a company I follow closely and a stock I’m genuinely comfortable owning. That conviction changes everything. It turns rolling from a defensive maneuver into a strategic choice, and assignment from a worst-case outcome into a valid next step. This matters.
NVDA is an asset I’m comfortable holding long-term. If the market forces me into ownership, I don’t panic — I transition. The trade does not end; it evolves. That optionality is everything.
At Terramatris crypto hedge fund, premium selling is the bread and butter of the fund. But the structure matters.
Instead of relying heavily on classic credit spreads, we primarily generate income through cash-secured puts and covered calls. These strategies are simple, transparent, and most importantly anchored in ownership. Premium is collected with a clear path forward if the market moves against us.
Options in the fund are used mainly for:
- Income generation via puts and calls
- Volatility management
- Occasional structured spreads, typically as hedges or adjustments
When positions move in-the-money, we sometimes transition into debit spreads to define risk, reduce exposure, or reshape the payoff. These are tactical tools, not the core income engine.
When selling premium:
- We actively roll positions when challenged
- We accept assignment without hesitation
- We deliberately transition into covered call selling — something we do continuously in crypto markets
The recurring theme is simple and intentional: ownership is not a failure mode; it’s a transition state. Every trade is designed with a next step in mind.
Recently, I launched a paid crypto weekly options newsletter, where I share structured trade ideas — including BTC and ETH credit spreads, which can be adjusted into iron condors if market conditions allow.
Let me be very clear here:I share these structures because they are educational, flexible, and widely requested.
But personally? I do not recommend trading credit spreads on assets you don’t want to own.
Recently, I read a comment from a trader saying something along the lines of:
“I’m against Bitcoin fundamentally, but I like trading it.”
To me, this is a serious strategic error. Why?
Because credit spreads and iron condors hide tail risk. You might be right 95% of the time. But the remaining 5% defines your long-term survival.
When the tail event arrives:
- Liquidity disappears
- Rolling becomes expensive
- Slippage explodes
- Psychology collapses
If you fundamentally dislike the asset, you’ll panic precisely when calm decision-making is required.
Selling credit spreads assumes:
- Volatility stays within expectations
- Markets behave “normally”
- You can always roll
None of these are guaranteed. When volatility explodes, the only thing that truly saves you is conviction - the willingness to hold, adapt, and restructure.
If you’re not comfortable owning the underlying:
- Assignment feels like failure
- Losses feel existential
- You close at the worst possible moment
That’s how small, consistent gains get erased in one trade.
After years of trading stocks, indices, and crypto options, my rule is simple:
Do not sell credit spreads or iron condors on assets you wouldn’t happily own long-term.
This rule:
- Filters bad trades automatically
- Reduces emotional decision-making
- Turns tail risk into strategy evolution
- Forces alignment between trading and investing
Premium selling without a ownership-based contingency plan is fragile.
If your only exit is “hope it expires worthless,” you’re not trading — you’re postponing risk. Markets eventually collect tuition. Make sure you can afford the lesson.
