I saw it again this morning. A guy on Twitter, account barely a year old, posted a screenshot of his $50,000 loss on weekly SPY puts. He bought them Friday afternoon, convinced this weekend's headlines out of Iran would crash the market. Instead, futures are flat, and his options will open Monday worth pennies. He bought a lottery ticket based on fear, and like most lottery tickets, it’s now worthless. This is the single biggest mistake I see retail traders make, and it’s why I make my living doing the exact opposite.

The news from Axios that Iran vows non-stop conflict is designed to provoke a reaction. It spikes fear, and in the options world, fear has a price: implied volatility (IV). While everyone else is panic-buying puts or FOMO-buying calls on defense stocks, I’m looking at the VIX, which jumped to 22 on Friday, and thinking about how to sell that spike. Time decay is the only edge that works every single day, and elevated IV just makes that edge sharper.

When I started as a market maker in Chicago, I learned to see the market from the inside out. You stop seeing headlines and start seeing order flow and volatility surfaces. News like this creates a surge in demand for options—both puts for protection and calls for speculation. This inflates the premium across the board. The market is essentially overpaying for insurance because of uncertainty. My job is to be the insurance salesman.

The vol surface is telling us the market is pricing in a much wider range of outcomes than is likely to materialize. Unless there's a direct, boots-on-the-ground escalation between the US and Iran (a low probability event, for now), this elevated IV will bleed out. That bleed is called theta decay, and it’s how I get paid. I’m not betting on direction; I’m betting that the worst-case scenario the options market is pricing in won’t happen.

You trade this fear by defining your risk and selling premium outside of the expected move. With IV rank in defense and energy stocks pushing the 70th percentile, I'm looking to sell put credit spreads on names I wouldn't mind owning at a lower price. This is a high-probability way to collect premium while the market is panicking.

• Ticker: Lockheed Martin (LMT)
• Current Price: ~$475
• My Trade: Sell the April 18th expiration $450/$440 put credit spread.
• Premium: Collect ~$2.50 per share, or $250 per contract.

Here’s the breakdown: I get paid $250 upfront. My maximum risk is $750 (the $10 width of the spread minus the $2.50 premium collected). My breakeven is at $447.50. As long as LMT stays above that price by April expiration, I keep the full premium. The stock has to fall over 5.5% before I even start to lose a penny. I'm giving myself a huge cushion.

For those learning, this is where a basic understanding of options Greeks explained with examples becomes your superpower. For this LMT spread, my net delta is positive but small, around +10. This means I have a slight bullish bias, but more importantly, it implies roughly an 80-85% probability of profit at initiation. My theta is positive, meaning I make money every single day that passes, assuming the stock price and IV stay the same. Theta is working for us here, collecting rent from the fear-buyers.

If selling naked premium or spreads feels too aggressive, the absolute best way to play this is with covered calls on solid companies. This is a core part of my portfolio. I own shares of some of the best covered call stocks 2026, and when IV spikes like this, it’s like getting an unexpected dividend. I rely on fundamental research from analysts like Sarah Chen to build my list of buy-and-hold candidates. Companies like LMT, RTX, and even blue-chip energy names like XOM are perfect.

This morning, I sold the April $490 calls against my LMT shares for a nice chunk of premium. If the stock rips higher, I’m fine selling my shares at a profit. If it stays flat or goes down, I keep the premium and lower my cost basis. It’s a win-win that lets me sleep at night, unlike the guy who yolo'd on weekly puts. I've found this strategy even more reliable than trying to figure out how to trade options on earnings safely, because the IV crush is less predictable there. For a macro view on how these tensions affect different sectors, Luna Park's work on capital flows is always a must-read.

The thesis is invalidated if this rhetoric turns into action—a direct military confrontation. In that case, volatility won't just be high, it will explode, and a defined-risk spread can still experience maximum loss. That's why position sizing is everything. Never sell more premium than you can afford to lose. But short of that tail-risk event, selling this fear is one of the most consistent edges an options trader has. So, my question to you is: are retail traders simply unaware of premium-selling strategies, or are the brokers and platforms we use structurally designed to push us towards the low-probability, high-commission business of buying options?