A cycle is one contract from open to close. Log one by hand, or connect a brokerage and import what you have already traded.
Size the next one
Everything here describes the position you would open, not the one you hold. The open position is on the .
Instrument and sizing
Notional is the size of the obligation, not the premium: strike × 100 × contracts. At 30% you have agreed to buy shares worth 30% of your account if the put is assigned, and the other 70% is what absorbs the fall. It is the one number every figure on this tab follows from. Every term, in one place.
— of equity
Read the whole of it: what that moment actually is, and what this page will not tell you
Falling under the requirement is a margin call, not a wipeout. You still own everything, and you can cure it by adding cash, closing the put yourself, or selling shares. But every margin agreement also lets the broker liquidate immediately, without notice and without a call, and in a fast decline that is what happens. You do not choose what gets sold or when. For a strategy whose whole premise is staying invested through drawdowns, being forced out at the bottom is the failure, not the loss itself.
This page does not tell you which size to run. It tells you what each size means and leaves the choice with you, because the right number depends on your income, your other holdings and how you behave in a drawdown, none of which it can see.
Market inputs —
ATM implied vol is the mid IV of the put you are actually selling: take it from the chain rather than from VIX, unless the expiry happens to sit 30 days out. Your broker's chain shows both.
The order
Why notional isn't leverage
What the premium number isn't
What this number isn't
The annualized figure is gross premium if every cycle expired worthless. It is not a return forecast and you will not keep it.Backtested at these settings, the 50% profit target hit after a median of 9 trading days, and only 17% of cycles ran the full term. Plan around being flat well before expiry rather than around the expiry date, and expect the next contract to be available sooner than the calendar suggests.
The margin formula, and where it breaks
Email me when this cushion falls below a floor I set: , under Position alerts.
Short put modelled as the Cboe strategy-based rule:mark + max(pct×underlying − OTM amount, 10%×strike),
where pct is 20% for equity and ETF options and 15% for broad-based index options.
Added to that is the maintenance requirement on the long SPY shares, which is the
larger of the two and the one most calculators leave out. Portfolio margin, if you
have it, is risk-based and much lower. This models the strategy-based case.
How the break point is solved
Falling price and rising vol both raise the requirement, so the break point is solved with the put re-marked at a higher IV as SPY drops. Set the response to zero to see the price-only answer. It will look far safer than it is.Overnight shock test
Your cushion the morning after, at each size and maintenance requirement. Deliberately worse than October 1987: a size that survives it is one you can stop thinking about.
Every size, every cost
Reading this table
This is a point-in-time shock, not a historical path. The path version, rolling the whole strategy day by day through 1990–2024 with a daily margin check, is
overlay.py --stress, and it is the one that produced the
25–40% survivable band. Use this screen for "what if tonight", use that one for
"what size do I run".
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How this tool is meant to be used
It is a monthly loop with one number in it. Roughly every four weeks: check the window is open, take the contract count off your current equity, sell it, then wait for the 50% target, which historically arrives after about nine trading days, not thirty.
Most of the time the answer really is "sell 3 SPYM puts." That is the product, not a shortcoming of it. What the tool is actually protecting you from is narrower than it looks:
Sizing drift. The count comes off current equity every cycle. Accounts grow, people keep selling the same number of contracts, and leverage creeps up without a decision ever being made. Recomputing is the whole discipline.
Granularity. One SPY contract is 77% of a $100k account. Which instrument, and how many, is genuinely not obvious, and getting it wrong is not a rounding error.
The ceiling. Run the Shock test once, find the notional that survives a 22% gap with the requirement doubled, then never think about it again.
Quitting during a normal bad run. One cycle in eight loses money. The log scores each loss against — losing cycles on record so a bad month reads as ordinary instead of as evidence.
Position, Margin, Shock test and Notes are setup and justification. You touch them when something changes, not monthly.
Expiries
Don't chase an exact DTE
Do not chase an exact DTE. Monthly expiries are 28–35 days apart, so an exact 30-day entry usually does not exist. The backtest cannot resolve 28 from 30 days apart at all, and the median cycle closes after about 13 calendar days anyway, so entry precision is washed out long before expiry. Sell the monthly nearest your target, in whatever part of the window you happen to be looking.
A monthly expiration moves to the Thursday when its Friday is a market holiday, Good Friday or Juneteenth, and the list shows the Thursday. Weekly Fridays that fall on a holiday are not moved here. Check the chain.
The call leg, if you write one covered calls against shares you already hold, and it adds nothing to the requirement
The call leg, if you write one
Listed strikes either side, and what each one costs:
Regimes: what the backtest saw, and where they are today
What this does and does not change
Covered means covered. The contract count is your shares divided by a hundred, rounded down, and nothing here will offer you more. A call written past that is a naked call, which has no ceiling on its loss and is not what this tool sizes.
It adds nothing to your margin requirement, because the shares are the collateral. The requirement, the cushion and the shock test above are unchanged by anything in this card, and the shock test ignores this premium rather than counting it, which errs toward showing you less room than you would have.
It is not a cycle of the overlay, so it does not reach the position log or the retention meter. Those measure the short put against a distribution of short-put outcomes, and a covered call is a different trade.
It is held to expiry, unlike the put. The put above is bought back at half its maximum profit; the measured call figures write once a month and let the contract run to the third Friday. Closing a short call early means buying it back after a fall, which returns the upside you just sold. Write these on a faster cadence and the research no longer describes what you are doing.
What it is measured to do, over the same three decades as everything else here, is buy a shallower worst case and give up return. Both figures, with the drawdown beside every return, are on the research page, along with what assignment costs a taxable holder.
Both legs together
Read the whole of it: where this one actually hurts
The two legs do not offset each other on the way down. That is the thing to understand before running both. A rise past the call strike costs you the rest of the rise and nothing more. A fall past the put strike assigns you more shares, at the strike, while the shares you already hold are falling at the same time.
So the combination is not a hedge in either direction. It sells the top of the rise and it doubles down into the fall, and the premium from both legs is the whole of what you are paid for that.
One opening a month, two different closes. Both legs go on together on the third Friday. The put comes off when it has made half its maximum profit and then waits for the next month; the call runs to expiry. That is the cadence every figure on the research page is measured at.
The call adds nothing to your margin requirement, because your shares cover it. The requirement, cushion and shock test above are the put's alone, and they are the numbers that decide whether a fall closes you out.
What the pair is measured to do, over the same three decades as everything else here, is roughly the put overlay's return at close to the index's own worst drawdown. It was the best risk-adjusted combination in the study, and it earns less than the put alone. Both figures, with the drawdown beside every return, are on the research page.
Early assignment on the call what being called away before the ex-date costs
Early assignment on the call
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What being called away actually costs
The shares go at the strike, and the dividend goes with them. Assignment on the day before the ex-date means you are not the holder of record, so you do not receive it. That is the whole of what the call holder is exercising to capture.
It realises the gain those shares were carrying, in that tax year, at whatever rate your holding period earns. For shares held a long time in a taxable account that is usually the larger number by some distance, and it is the one nobody prices in advance. This is not tax advice and was not written by a tax professional.
Rolling and assignment are the same trade before tax. A roll does not keep the strike: the expiring call settles at what it is worth, realising its loss, and the next is written at the target delta from wherever the price is by then. What rolling buys you is not having to sell the shares, which is a tax difference rather than a market one.
A cash-settled index call has no early exercise at all. Nothing is delivered, so the shares can never leave and this card does not apply to one. It is not free either, and the reasons are on the research page: an index call against your shares is a straddle for tax purposes, and it can cost the qualified dividend rate on those very dividends.
The open position, close and re-size the monthly loop, with one number in it
The open position
—Close and re-size
What it compounds to a 30-year projection with the drawdown beside every figure, and why a 401(k) comes first
What the edge is worth over time
Why a 401(k) beats this, and by how much
A match paying fifty cents on the dollar is an instant 50% on what you put in, against about — a year from the overlay, roughly — bigger, guaranteed, on day one.
Even with no match, a traditional plan's deduction lets you invest about — more up front at the rate above, and that head start compounds from day one. The edge measured here is a fraction of a point a year against it, so the tax-advantaged account wins for a long time on any reading. A Roth is closer and still wins.
You also cannot run this inside those accounts. Retirement accounts are not permitted to borrow, so any options trade requiring margin is prohibited. Cash-secured puts are allowed, but that means holding cash instead of shares, a different strategy, and historically a worse one.
Two honest exceptions: money you will need before 59½, and money with no tax-advantaged home left. The second case is what this tool is for.
The order your money should go in
| priority | why |
|---|---|
| 1. 401(k) to the full match | Fifty cents per dollar is an instant 50% on your contribution. Nothing below competes with it. |
| 2. Max the tax-advantaged space | Traditional or Roth, per your bracket now versus later. |
| 3. A conservative bridge, if retiring early | Money you spend within 10 years does not belong in a strategy with a — drawdown. |
| 4. This strategy | Long-horizon taxable money with nowhere better to go. |
What this is and is not
This is arithmetic on a backtested figure, not a forecast. It takes the index return and the overlay edge measured over the backtest window and compounds them forward. Neither number is a prediction, and the future does not have to resemble a sample that contained exactly one 2008.
The edge is read off your notional using the measured curve: —. It grows roughly in line with size, which is the honest way of saying most of it is leverage rather than skill.
The drawdown column is not decoration. Every extra point of edge in this table was bought with a deeper hole and a shorter distance to a margin call. A projection that shows only the upside of leverage is the oldest way to mislead someone with a spreadsheet.
What is left out: commissions, the fills you actually get, dividends reinvested imperfectly, any year you skip cycles, and the possibility that you stop after a bad month. The last one is the largest and the least modellable.
It is a monthly loop with one number in it. Check the window, take the count off today's equity, sell it, and wait for half the maximum profit, which has been about nine trading days. Everything above is how you decide that number; everything in here you touch when something changes.
Where the numbers come from Backtest of 30-day ATM puts on SPY, — · — cycles
overlay.py used to produce every figure quoted here;
on every load the page prices six reference contracts and four margin cases
and compares them, and the row above is the result. If that row is ever
red, do not trust the numbers above it.Portfolio
What you own, what it does, and the equity every other tab is sized from.
Nothing you have imported or typed is locked. See what Pro costs.
About beta
Option contracts are left out of the blend. A contract is a liability at market value rather than market exposure, and this tool does not model option delta, so it has no beta to contribute. Including one at zero would not be neutral, it would drag the blended figure toward 1.00 and make a book look closer to the index than it is. Contracts still count toward your equity, because that is what the account is worth; they are only absent from this one number.
Cash and money market funds are different: they are held at beta 0 and DO stay in the blend, because cash genuinely does not fall with the index and a book holding it genuinely falls less.
Send feedback
Something broken, or something you wish it did. It goes straight to the person who builds Restrike.
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Strategies
What each one is, what counts as a win, and what the log has recorded under its name. This list is what the strategy picker offers on every position.
Settings and notifications
What reaches you without your having to look. What counts as a win is set per strategy on the tab.
Learn more
Learn more
Your own positions carry your instrument and strike; everything else in the feed is the same for everybody. Anyone holding the link can read them, so leave that row off unless you want that. It never carries your equity, size or cost.
Put the overlay’s dates in your calendar
By default these are the put overlay's dates and nothing else's. They are computed third Fridays against the target DTE you set, so the feed shows the same twelve months whether or not you have a position open. Switching on your own positions above adds the expiries of what you actually hold, whatever strategy they belong to.
Change your settings and the calendar follows. Turn an event off, move your DTE, switch instrument: the link stays the same and your calendar picks the change up on its next refresh, usually within a day. You never need a new link because something changed here.
Anyone holding this link can see these dates, so treat it like a password. Creating a new one turns the old one off.
The scorecard
What each strategy has actually done, scored against your own rule rather than against a good month.
Positions are sold unless marked long.