Cheat Sheet: The Key Numbers

One-page reference card for the canonical mechanical parameters of the systematic short-premium method. Every figure carries a one-line why and an evidence grade. Numbers are defaults/heuristics, not laws — see the linked research finding for the full evidence review. Grade key: A = primary study; B = house canon, reasoned; C = third-party / standard theory; D = uncited.

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1. The Canonical Numbers (the "operating system")

The mantra: enter ~45 DTE → manage at 50% (25% ATM) → exit/roll by 21 DTE → trade small, trade often.

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2. Strike Selection (delta as a dial)

Read delta ≈ probability of finishing ITM (a "rule-of-thumb," explicitly not a scientific probability). Lower delta = higher POP, smaller credit; higher delta = more credit, more directional risk.

Credit-spread / iron-condor sizing rule: collect ~1/3 of the strike width in credit → ~67% probability of success. As the house canon puts it: "We shoot for collecting 1/3rd the width of the strikes in premium … This gives us a probability of success around 67%."
POP shortcut: `POP ≈ 1 − (credit ÷ width)` for a vertical credit spread.
Caveats: delta P(ITM) ≠ P(profit) (credit widens the real breakeven, so POP > 1 − delta); touch ≈ 2× finish (a 16Δ strike is tested ~32% of the time); put-side skew makes the 1-SD downside strike carry a delta a touch above 16.

→ Full review: ../18_research_findings/delta-strike-selection.md

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3. Entry Filter (whether to trade at all)

IVR is a filter + sizing dial, not a trade signal — it says options are expensive, not which way price goes. The exact "50" line is a heuristic (some studies favor ~30 on index ETFs); cross-check against IV Percentile when the two disagree.
Worked EM: \$100 underlying, 20% IV, 45 DTE → 100 × 0.20 × √(45/365) ≈ ±\$7 → 16Δ strikes ≈ \$93 / \$107.

→ Full review: ../18_research_findings/iv-rank-entry-timing.md · ../03_implied_volatility

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4. Sizing (the #1 thing that matters)

Sizing rules of thumb

Size by defined max loss / BPR — never by credit collected. A \$1.00 credit can hide 10× different risk.
For undefined-risk, margin ≈ a 2-SD move — check estimated loss at 2 SD before entry (margin understates the tail).
Many small, uncorrelated occurrences beat a few large ones — the law of large numbers only works with enough independent trades.

→ Full detail: ../20_position_sizing · ../06_portfolio_management · ../16_small_accounts

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5. One-Glance Decision Rules

Should I be in a premium trade? → IVR > 50? If no, stand aside or size down / go defined-risk.
When in the cycle? → the monthly nearest 45 DTE. (38–52 is fine.)
Where are my strikes? → 16Δ strangle (1 SD) · 30Δ credit spread · 1/3-width iron condor.
How big? → max loss ≤ 1–5% of net liq; total ≤ ~25–50% by IV regime.
When do I leave? → first of: 50% profit (25% ATM) · 21 DTE · 2× credit loss (undefined risk).

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6. What These Numbers Are NOT

Not optimized constants. 45 / 50 / 21 / 16 / 30 are round, memorable, liquid defaults inside good ranges — no study shows 45 beats 43, or 50 beats 55.
Not universal. They describe premium selling on liquid underlyings. Calendars/diagonals invert the DTE logic; earnings trades are event-dated; debit/directional trades pick tenor by the move.
Not edge by themselves. The mechanics ride the volatility risk premium (IV tends to overstate realized vol) and the law of large numbers. Sizing — not strike-picking — controls survival.

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Source threads (full evidence reviews)

../18_research_findings/45-dte-entry.md · ../18_research_findings/managing-winners-50-percent.md · ../18_research_findings/straddle-management-25-percent.md · ../18_research_findings/21-dte-management.md · ../18_research_findings/delta-strike-selection.md · ../18_research_findings/iv-rank-entry-timing.md · ../18_research_findings/strangle-vs-iron-condor.md

Strategy & mechanics: ../05_trade_management · ../09_strangles · ../10_iron_condors · ../11_credit_spreads · ../02_probability · ../29_source_index

_Evidence-labeled per the Project Charter. Education only, not financial advice._