Part 8/11:
Discipline and risk management are paramount. Overexposing oneself by increasing the number of contracts or narrowing strike distances in pursuit of higher premiums introduces significant risks. For instance, selling 10 contracts instead of five might double potential income but increases the risk of margin calls if the stock breaks out of the channel.
The key is to adhere to a rule of thumb—aiming for about 1% weekly alpha returns, which, compounded over a year, could lead to portfolio growth of approximately 60%. Making incremental, disciplined trades—such as selling weekly puts at an out-of-the-money strike—builds up consistent gains while managing downside exposure.