TL;DR
- Print the one-page PDF, tape it next to your screen, and answer every box before clicking “Submit Order.”
- The checklist forces you to verify trend, entry, exit, and cash-flow rules in under ninety seconds.
- Skip any step and you’re trading hope, not probability. Use the checklist, bank the income, and sleep at night.
I lost a third of my account in 2008. Not because the market crashed, but because I broke my own rules. I owned a basket of growth names, the headlines turned ugly, and I kept telling myself, “It will bounce back tomorrow.” Tomorrow turned into weeks, and weeks turned into real money gone.
That Sunday night I taped a simple sheet of paper above my monitor. Nine boxes. One page. I promised myself I would never hit the buy button unless every box had a check mark. Since then I have paid myself through the 2020 crash, the 2022 whipsaw, and every Fed-mouth tantrum in between. The sheet is still taped to the wall in my home office. Today I am handing you the exact same one-page options checklist so you can do what I do: collect income on demand instead of hoping for a miracle.
1. Trend Filter First, Always
Before I care about strike prices or expiration dates, I want to know if the wind is at my back. I open a weekly chart and ask two questions: Is the 10-week moving average sloping up? Is price above that line? If the answer is no, the stock is not even allowed on the list. This single filter keeps me from trying to catch falling knives and forces me to fish only in ponds where the big money is already swimming. You can watch me walk through this screen every Monday on our YouTube channel.
2. Entry Zone: The Sweet Spot Between Support and Resistance
Once the trend is up, I zoom to the daily chart and mark the last two swing highs and swing lows. My entry zone is the upper third of that range. Buy too close to resistance and you run out of room for the stock to breathe. Buy too close to support and you sit through dead money while the market figures itself out. I want to be in the area where a small move in my favor pays the call premium and a small move against me still keeps me profitable on the income side.
3. The 1% Rule for Covered Calls
I will not sell a call that pays less than 1% of the stock price per month. A $50 stock needs to bring in at least fifty cents of premium. Below that threshold I am working too hard for too little. Above it I can keep stacking cash even if the stock treads water. You can see the exact math spelled out in this covered-call primer on our site.
4. Circuit Breaker: The Line in the Sand
Every trade gets a stop-loss equal to three times the premium I collect. If I take in one dollar of call income, I am willing to lose three dollars of stock price before I exit. This simple ratio keeps the numbers honest. When the stock punches through that line, I sell the shares, buy back the call, and redeploy the cash. No excuses, no hope trades. My worst single loss in the last five years was 2.1% of account value because this rule yanked me out before the bleeding got serious.
5. Position Size: One Trade Doesn’t End the Game
I risk no more than 2% of total account equity on any one covered-call position. That means a $250,000 account never has more than five grand at risk on a single name. This keeps one bad apple from spoiling the entire barrel and lets me run a diversified portfolio of 10-12 names without staying glued to the screen.
6. The Weekend Review Ritual
Every Saturday morning I pour a cup of coffee and run the checklist against every open position. Trend still up? Stock still above the 10-week? Premium still above 1% on the next expiration? If any box is blank, the position gets closed the following Monday. This ritual takes twelve minutes and saves me from the slow bleed of wishful thinking.
How long does the checklist take to complete?
Ninety seconds for a stock you already know, maybe three minutes for a new name. The goal is speed with discipline, not paralysis by analysis.
Can the checklist be used for monthly or weekly calls?
Yes. I run it exactly the same whether I am selling a four-week or a seven-day call. The percentages adjust, the rules do not.
What happens if a stock gaps through the stop-loss overnight?
I still exit at the open. Gaps are part of the game. The rule is mechanical because emotions cannot be trusted when the market is moving faster than my heartbeat.
Print the checklist, tape it where you trade, and treat it like a pilot treats a pre-flight list. If you want the done-for-you version, including the exact PDF and four live examples, the Options Mentorship is open for the next cohort.
This is education, not financial advice. Past performance is not indicative of future results. Consult a qualified advisor before making investment decisions.