Author: Ruslan Averin | averin.com
Options Trading Framework: Leverage Without Forced Exits
I employ options for a single primary reason: they provide leverage while eliminating margin calls. That structural asymmetry — capped downside, theoretically unbounded gains — distinguishes options from every other tradable instrument in my portfolio.
Yet most traders approach options backwards. They purchase short-dated lottery tickets when IV already sits elevated. They chase momentum by buying calls on stocks mid-move. They short puts on securities they'd hate to own. My methodology reverses all three of these patterns.
Why Options Outperform Margin for Leverage
The conventional leverage mechanism is margin. It delivers buying power, but introduces a critical flaw options eliminate: involuntary liquidation. Margin calls ignore your investment thesis. They only care about your account balance when triggered.
I've watched solid trades collapse due to margin calls at precisely the worst moment — at a temporary low that recovered within weeks. The position was correct. The structure wasn't.
Options remove this problem. When I purchase a call, my maximum loss gets locked in at purchase: the premium spent. Timing can be off. Magnitude estimates can be wrong. Directional bets can fail temporarily — yet the position stays intact until expiry. Volatility fluctuations don't matter. My downside is capped.
This matters tremendously. During volatile periods — and 2026 has delivered volatility — that structural guarantee reshapes my thinking about sizing and weathering drawdowns.
Three Core Strategies I Execute
My options trading revolves around three recurring strategies. I operate rarely outside this framework.
Strategy 1: IV Crush Around Earnings. Implied volatility balloons on individual equities heading into earnings as markets price event uncertainty. Post-earnings, IV collapses mechanistically — the catalyst justifying high vol has passed.
I execute this by shorting options before earnings on stocks where IV has spiked to historically elevated percentiles versus recent realized volatility. The profit comes from IV compression, not earnings forecasting. Position sizing stays modest — 1-2% of portfolio per trade — because directional risk surrounding earnings remains real despite the vol mean-reversion focus.
Strategy 2: Covered Calls Against Held Positions. For equities I own directly and plan holding across multiple market cycles, I short calls at strike prices exceeding my target exit level. This generates cash flow on positions I'm maintaining regardless, trading away unlimited upside if the stock surges past my strike.
Throughout 2026, I've executed this actively on Mag-7 names where IV generates sufficient premium for material income while my long-term confidence justifies weathering volatility. Elevated IV produces substantial covered call yields. Premium collected lowers effective cost basis and cushions against declines.
Strategy 3: Far Out-of-the-Money Puts for Tail Protection. I allocate 1-2% of portfolio annually into deeply out-of-the-money puts on broad indices or specific names underpricing tail risk. These trades rarely generate wins. When they do, payoffs are substantial.
I categorize this as portfolio insurance rather than speculation. For a focused long equity portfolio, this put allocation represents the price of staying calm during systemic selloffs. The 2020 COVID collapse and 2022 rate shock both saw my tail-risk puts deliver material P&L relief or emotional security to avoid panic selling.
Sizing Options Using Delta-Adjusted Exposure
Options position sizing differs from equity sizing because leverage embeds automatically. Allocating 5% to a 2x leveraged options position generates 10% effective market exposure, potentially exceeding targets.
My approach: Size options by delta-adjusted equity value, not nominal premium outlay. Purchasing $10,000 in calls at 0.4 delta equals $4,000 of equity exposure for sizing calculations. I then apply identical concentration constraints as direct stock holdings.
This prevents the frequent mistake of underallocating options nominally while accidentally overweighting actual market exposure.
What I Exclude: 0DTE Options Speculation
Zero-day-to-expiration options comprise the market's fastest-expanding segment. I skip them entirely. Never occasionally. Never as experiments. Never.
Buffett likened certain derivatives to casinos. The 0DTE market ranks closest to that analogy among listed options. The mathematics for buyers are terrible: you need to nail direction, magnitude, and timing — all intraday. Market makers, possessing structural pricing and execution advantages, occupy the other side.
The expected risk-adjusted return of purchasing 0DTE options without professional intraday edge is mathematically negative. This follows mathematically from spread economics and probability distributions — no controversy required.
I'd rather deploy capital toward Strategy 1 or Strategy 2, where I possess genuine edge or validated thesis, than instruments engineered to extract retail capital toward institutional counterparties systematically.
Current Market Conditions: 2026 IV Environment on Semiconductors and Mag-7
This market presents one of the more compelling options setups I've encountered. Semiconductor equities — Micron, Nvidia, AMD, TSMC — display implied volatility reflecting legitimate macro uncertainty: AI infrastructure spending, export restrictions, supply concentration. This elevated vol makes Strategy 2 (covered calls) especially compelling on holdings I want to retain across the full cycle.
Mag-7 dynamics mirror this. Apple, Alphabet, Amazon, Meta all quote at IV levels producing substantial annualized covered call yields. I've been consistently shorting calls against owned positions at strikes matching my acceptable exit prices. Stock surges past my strike? I exit at intended levels. Stays below? Premium stays mine, and I repeat.
One principle I maintain regardless: never purchasing options when IV exceeds 2x the index implied volatility. Single-name stocks at 80+ implied vol against 15 VIX reflect magnitude expectations history rarely confirms. At that point, selling vol — not buying — creates structural advantage.
That's the system. It isn't intricate. Though most profitable options trading stems from discipline in what you skip, not invention in what you do.
— Ruslan Averin, averin.com
Original: https://averin.com/en/journal/ruslan-averin-options-strategy-framework-2026
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