Why Premiums Are Low Right Now
Option premiums are driven by implied volatility (IV). When the VIX sits below 15, premiums across the market are depressed. A put that paid $3.50 during a VIX 25 environment might only pay $1.50 when VIX is 13. This isn't a flaw in your strategy — it's the market pricing in lower expected movement.
7 Solutions to Boost Premium
1. Move Closer to the Money
The simplest lever. Instead of selling 8% out of the money, try 3-4% out of the money.
You're accepting a higher probability of assignment, but the premium more than doubles. If you'd be happy owning AAPL at $187, the risk-reward improves significantly.
2. Extend Duration to 45-60 Days
Time value increases with longer expirations, though not linearly. Going from 30 to 45 days typically adds 30-40% more premium while adding only 50% more time.
The theta decay curve is steepest in the final 30 days anyway, so selling at 45 DTE and closing at 21 DTE captures a large chunk of premium efficiently.
3. Target Higher-IV Stocks
Not all stocks are created equal. Blue chips like Coca-Cola and Johnson & Johnson have IV around 15-18%. Growth names like Tesla, AMD, and Palantir sit at 35-55% IV.
The higher IV translates directly to richer premiums. A 5% OTM put on Tesla might yield 3% monthly versus 0.6% on Coca-Cola.
4. Sell During Volatility Spikes
When the market drops 2-3% in a day, IV spikes and premiums expand. These are often the best days to sell puts — you get elevated premium AND the stock is already lower (giving you a better entry if assigned).
Watch for VIX above 20 as a signal that premiums are elevated. Above 25, premiums are rich. Above 30, they're extremely generous.
5. Use Weekly Options
Weeklies have higher annualized rates. Selling weekly AMD $155 puts at $1.10/week × 4 = $4.40 vs one monthly at $3.20. The catch: four trades means four times the management work and commissions.
6. Sell Puts Around Earnings (Carefully)
IV inflates before earnings announcements. Selling a put 1-2 weeks before earnings captures elevated premium. If the stock doesn't move much post-earnings, IV crush works in your favor and the put loses value rapidly.
The risk: if the stock drops 15% on a bad report, your elevated premium is small comfort. Only do this on stocks where you'd genuinely want to own shares at the strike price.
7. Layer Multiple Positions
Instead of one large put, sell multiple smaller positions across different stocks and expirations:
Total premium: $490 across $19,200 in committed capital. That's 2.6% for the month — much better than a single conservative put on one stock.
When Low Premium Is Telling You Something
Sometimes low premium is the market's way of saying the stock isn't expected to move. That can actually be useful information: if you sell a low-premium put and get assigned, you're likely buying a stable, low-volatility stock. Not exciting, but not a blow-up risk either.
If premiums are universally low across every stock you check, consider sitting on the sidelines. Cash is a position. Wait for a market pullback to bring volatility — and premiums — back to attractive levels.
OptionsPilot's strike finder sorts by premium yield and highlights when a stock's current IV rank is above its 6-month average, helping you find the richest premiums without manually scanning dozens of option chains.