In this week's episode, sprocket888 is flying solo. He takes this opportunity to talk about the two metrics that direct his portfolio composition. Those two metrics are his portfolio Delta and his portfolio Theta. sprocket888 is a pure premium seller. However, the magnitude and risk that is sold must be controlled. Over the years of experimenting, he has boiled this down to just two simple metrics. The first is portfolio delta. This metric measures his directional risk. This value is targeted to remain neutral. By keeping the portfolio delta's neutral, the volatility felt in the portfolio is very muted and manageable. The second metric is the portfolio Theta. This value measures the amount of decay each day. This metric helps guide the magnitude and expected gains by allowing premiums to erode. sprocket888 shows you what he does to adjust deltas and thetas in real-world examples.

• 00:00 Disclaimer
• 00:17 Intro
• 01:37 sprocket888's portfolio
• 02:13 Group positions by the expiration date
• 03:25 Selling covered calls on positions that have been assigned is a thing to do
• 05:43 Keeping it neutral
• 06:37 Only TWO fundamental values do I track every day
• 07:29 Delta is the FIRST number to watch
• 09:44 Theta is the SECOND number to watch
• 10:43 Visualizing these two key metrics
• 12:15 Actual portfolio delta
• 13:00 Actual portfolio theta
• 13:58 What happens when the deltas are NOT in balance?
• 17:17 What happens when theta is too low?
• 17:42 Heading to the screener
• 19:00 Once we have a ticker, time to check the chart
• 20:31 Next, check the premium on the option chain
• 21:43 Adding in the trade, what theta do we get?
• 23:41 Need more theta? Get out the pole and go fishing.
• 27:31 When do you take a position off?
• 31:13 Conclusion: sprocket is all about selling that premium, watching the delta and theta numbers to guide actions
• 33:49 Outro

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