Selling Options in a Market Correction: What Changes and What Doesn’t

Markets correct. It happens multiple times per year. If you panic when corrections happen, you’ll have a very stressful (and unprofitable) experience as an options seller. Here’s how I think about and navigate corrections.

What Changes in a Correction

IV spikes (premiums get much more expensive — both to buy AND to sell). Stocks fall across the board — even good companies drop. There’s more fear and uncertainty in the market. Spreads widen on some options. Some of your positions may go ITM temporarily.

What DOESN’T Change in a Correction

The fundamental value of quality businesses. The mechanics of the Wheel (premiums still decay, theta still works). The advantage of being a seller (high IV = higher premiums collected). Your edge from knowing your stocks well. The fact that corrections always end.

My Correction Playbook

1. Size down immediately. Reduce new position sizes by 30-50%. Don’t add as aggressively. 2. Use the elevated IV. The premiums are incredible during corrections. The stocks I like at $100 now pay 3x the premium on puts below $80. 3. Focus on the highest quality names only. Corrections are when weak companies bleed out. Stick to names with real businesses. 4. Use wider strikes. Go further OTM than usual. Accept lower premium percentage but more cushion against the drop. 5. Be patient about new entries. The best entries often come 1-2 weeks AFTER the initial panic, not during.

Real Examples from the 2025 Correction

RDDT: Dropped from $160 to $95. I sold $80 CSPs with 30-day expirations. The premium was enormous — collecting $800-$1,000 per contract. The stock recovered to $130+ within 6 weeks.

CRWV: Dropped to $35 area. I sold $28 CSPs for $4+ premium per contract. Well below the drop level. Stock bounced back and I kept the full premium.

NBIS: Took a hit in the correction. I sold $15 CSPs while the stock was at $22. Big cushion, big premium. Worked out perfectly.

The Mindset Shift in Investing & Trading

Corrections are NOT the enemy of options sellers. They’re OPPORTUNITIES. When everyone else is selling in fear and volatility is spiking, that’s when the best risk-adjusted premiums appear. The key is having the cash reserve and the emotional stability to capitalize instead of panic.