VIX closed at 18.92 on Wednesday. It has shed nearly 30% from the 12-month high above 31 set in late March when the Iran ceasefire was in doubt. The index is back inside the "normal" range — but I would argue normal is a relative term when there is an active war in the Persian Gulf and Brent crude is trading near $100.
Here is my complete options playbook for Q2 2026: what I am running, why, and the exact risk parameters.
The Volatility Landscape
The VIX term structure is in contango — front-month vol is lower than back-month vol. This is the market's way of saying: "things are calm now, but we expect turbulence later." I agree with the term structure, which means I want to be selling near-term premium and buying longer-dated protection.
Implied volatility on individual names is bifurcated. Tech mega-caps have 30-40 IV ahead of earnings. Energy names have 45-55 IV because of Iran uncertainty. Defensive sectors (utilities, staples) have sub-20 IV.
This creates a rich opportunity set. I am selling expensive vol where I want to own the stock, and buying cheap vol where I want protection.
Strategy 1: Selling Puts on Quality Names
This is my bread-and-butter strategy. I sell cash-secured puts on companies I want to own at lower prices. With VIX at 19, premiums are decent — not as juicy as March when VIX was 31, but still attractive on elevated-vol names.
Current positions:
AAPL Jun 20 $195P — sold at $3.80. Apple trades at $212. I am willing to own it at $191 effective ($195 minus premium). Apple reports May 1. If earnings disappoint and the stock drops, I buy a great business 10% cheaper. If it holds, I keep 2% in 57 days.
MSFT Jun 20 $390P — sold at $7.50. Microsoft at $420, reporting April 30. AI capex guidance will drive the stock. I want to own MSFT at $382 effective. The put premium reflects earnings-elevated IV — selling vol into earnings is a core part of my approach.
GOOGL Jun 20 $160P — sold at $3.20. Alphabet at $175, reporting April 30. Search is stable, Cloud is accelerating, YouTube is undermonetized. At $157 effective, I am buying at roughly 17x earnings.
JPM Jul 18 $235P — sold at $4.80. JPM reported strong Q1 numbers with NII guidance raised. At $230 effective entry, this is a fortress balance sheet at 10x earnings.
V Jul 18 $310P — sold at $5.50. Visa is one of the highest-quality businesses in the world. Cross-border volume recovery post-Iran-ceasefire is a tailwind. At $305 effective, I am getting a 25x earnings entry on a company growing 12% annually.
Total capital reserved for put assignments: roughly 25% of portfolio. If all puts get assigned simultaneously, I am comfortable owning every one of these names at these prices.
Strategy 2: Portfolio Hedges
With the Iran situation unresolved and the ceasefire deadline expiring this week, I maintain structural hedges. The goal is not to profit from a crash — it is to limit drawdown so I can act during a crash.
SPY Jun 20 $650P — bought at $8.40. S&P at roughly 7,100. This is 8.5% out-of-the-money. If we get a 15% correction (S&P to 6,000), these puts are worth $50+. Cost: 0.4% of portfolio per quarter.
SPY Sep 19 $620P — bought at $14.20. Longer-dated protection through the summer. Iran escalation risk, tariff summit with Xi, potential Fed surprises — this covers all of it. If nothing happens, I lose the premium. Acceptable.
VIX Jul 15 20/35 call spread — bought at $2.10. VIX at 19. If it spikes to 35 (which it did in March), this spread pays $13. A 6:1 payoff ratio. I buy these monthly and view them as catastrophe insurance.
Total hedge cost this quarter: roughly 1.8% of portfolio. I have been running 1.5-2.5% hedge cost for three years. It is a drag on returns in calm markets and a lifesaver in volatile ones.
Strategy 3: Covered Calls on Long-Term Holdings
I hold core positions in several names where near-term upside is limited but I want to maintain exposure. Covered calls generate income while I wait.
XOM — sold Jul 18 $125C at $3.20. Exxon at $118. Oil is elevated but the stock has already priced in $95-100 Brent. If XOM runs to $125 on a Hormuz escalation, I sell at a nice profit plus the premium. If oil stabilizes, I keep the income.
AVGO — sold Jun 20 $210C at $6.50. Broadcom at $195. The stock has run hard on AI networking demand. I am happy to sell at $216 effective and redeploy capital.
JNJ — sold Jul 18 $165C at $2.80. JNJ at $158. Defensive name, limited upside in this environment. The call premium adds 1.8% to my hold over 85 days.
Covered call income target: 1-2% per month on called positions. This offsets my hedge costs and then some.
Strategy 4: LEAPS on High-Conviction Names
LEAPS let me express high-conviction, multi-year views with defined risk. I use January 2028 expiry for maximum time value.
TSMC Jan 2028 $200C — bought at $32. TSMC at $185. The AI infrastructure buildout requires TSMC's advanced nodes. Samsung is years behind. Intel Foundry is still ramping. TSMC's monopoly position in leading-edge chips is worth a premium I do not think the market fully reflects.
AMZN Jan 2028 $220C — bought at $28. Amazon at $200. AWS re-acceleration, advertising growth, margin expansion from logistics efficiency. At $248 breakeven, I need roughly 25% upside in 21 months. The stock did 40% in 2024 and 25% in 2025.
Nu Holdings (NU) Jan 2028 $18C — bought at $3.50. NU at $15. The largest digital bank in Latin America, growing 40%+ annually, recently profitable. If LatAm fintech plays out, this stock is $30-40. If it does not, I lose $3.50 per share. Asymmetric.
LEAPS allocation: roughly 3% of portfolio. Small positions, high conviction, defined maximum loss.
Position Sizing and Risk Management
My options portfolio follows strict rules:
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No single put position exceeds 6% of portfolio. If assigned, I want each position to be a comfortable part of a diversified portfolio — not a concentration risk.
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Total notional exposure from sold puts never exceeds 30%. If every put gets assigned simultaneously (a crash scenario), the equity allocation shifts from current levels to roughly 85%. Aggressive but survivable.
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Hedge cost stays between 1.5% and 2.5% per quarter. Less than that, I am underinsured. More than that, the drag kills compounding.
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LEAPS never exceed 5% of portfolio. These are speculative by nature and can go to zero.
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I never sell naked calls. Covered calls only. Unlimited upside risk is not a strategy — it is a prayer.
When to Sell Premium vs Buy Protection
The decision framework is simple:
Sell premium when:
- VIX is above 20 (elevated fear means rich premiums)
- You want to own the underlying at the strike price
- You can handle assignment without portfolio stress
- Implied vol exceeds your estimate of realized vol
Buy protection when:
- VIX is below 16 (protection is cheap)
- You have concentrated equity exposure
- There are identifiable tail risks on the horizon (Iran escalation, tariff shock, FOMC surprise)
- The cost of protection is less than 2% per quarter
Right now, with VIX at 19, we are in a gray zone. I am doing both — selling puts on individual names where IV is rich (30-40 on mega-cap tech ahead of earnings), and buying index puts and VIX calls where IV is relatively compressed.
The options market is the only place where you can explicitly price and trade fear. Everyone else has to live with uncertainty. Options traders get to monetize it — or hedge against it. That is the edge.