When to Trade: Mechanics Behind Put Path Strategy (Managing Risk and Time Decay)

Are you struggling to figure out when to trade? How often to trade? When to close trades? How much time do you want to leave trades on for? Are you spending all your time during the day staring at trading screens? How much time to spend researching trades? Time is our most precious resource and this post digs into my recommendations for all of this.

The Put Paradise philosophy is built on a trading system called the Put Path. This methodology’s success or failure not determined by a single trade. We don’t look for get rich quick schemes, long call moonshots, Wall Street Bets stock picks, wild speculation, or unusual options activity. Instead, we focus on long-term profitability and offer consistency based on how trades are structured over time, how risk is distributed across expirations, and how to take advantage of high percentage trades to control what we can control throughout the trade lifecycle. We control strike selection and lot size, but this post is focused on when we trade and how we control trade timing and avoiding expiration date clustering. When too many positions share the same expiration, portfolio risk becomes concentrated even if the individual trades are high probability of profit upon entry. So, we focus on “diversifying” this risk by spreading expirations across each week for all 12 underlyings. The other major advantage that we control is the timing of When to Open the Trade. The timing to open the trade is critical to maximize the premium pricing received and maximize the buffer of the strike price versus the current underlying price. We have all heard that you can’t time the stock market (and that may be true), but in the options market, timing is everything!

In this post we are going to dive into some of the basic Greeks and how we apply them to the Put Path Options Trading System methodology. Here are the basic definitions of Delta, Gamma and Theta:

Delta (Δ)

Delta measures the rate at which an option’s price changes relative to a $1 move in the underlying asset. In short-premium strategies, Delta represents the position’s directional exposure and the probability that the option finishes in-the-money. Lower Delta indicates less sensitivity to price movement and higher margin for error (probability of profit).

Gamma (Γ)

Gamma is a second order Greek that measures the rate of change of Delta as the underlying asset price moves. For short option positions, Gamma represents the risk of rapidly increasing directional exposure, particularly as expiration approaches. High Gamma environments can cause small price changes to produce disproportionate risk.

Theta (Θ)

Theta measures the rate at which an option’s extrinsic value decays over time, assuming all other factors remain constant. In short-premium strategies, Theta represents the primary source of expected return, as time decay systematically reduces the value of the option sold.

The Put Path approach addresses timing by balancing Theta decay, Delta exposure, and Gamma risk, while reducing dependence on any single trade outcome. This post explains why laddering trades works, why 28 DTE (Days To Expiration) is often optimal for selling Put Credit Spreads, and how Delta, Theta, and Gamma evolve over the life of a typical trade. So why is laddering a core risk management tool? Our laddering strategy involves entering trades at different times so that positions expire on multiple dates rather than all at once. In the Put Path system, this means opening one trade per underlying per week, each targeting roughly 28-32 DTE (trades opening on Monday are 32 DTE and trades opening on Friday are 28 DTE). When trades are concentrated into a single expiration, portfolio performance becomes overly sensitive to short-term market conditions. A volatility spike, a macro event, or a sharp price movement near expiration can impact all positions simultaneously. Laddering trades spreads this risk across time. Each position experiences slightly different market conditions, reducing the likelihood that one adverse event disproportionately affects the entire underlying performance.

From a Greeks perspective, laddering distributes Delta exposure across slightly different market conditions, prevents excessive Gamma concentration near a single expiration, and creates a smoother and more predictable Theta decay profile. Instead of experiencing sharp changes in risk near one expiration date, laddered trades allow risk to unfold gradually and more manageably. So when do we open? When opening a trade from Monday to Thursday, we typically wait for the underlying to drop 1% during the current trading day. For the six stock underlyings, 1% drops usually correlate to a 5% or more increase in volatility (VIX) for that day. It’s typically advantageous to sell after the 1% or more move downward in the underlying. As volatility increases (due to market uncertainty or underlying price declines), our option prices increase and therefore our Strike Prices widen comparatively against the same Delta value (-0.15), which adds safety margin when opening trades. So, in practice, you will be able to sell options that are farther out of the money. When we are selling something (opening the position) you want the price to be as high as possible. So, we may trade anytime during the week, but if I haven’t traded all 12 names by Friday, then I’ll enter the balance of the trades on Friday to take advantage of the laddering benefits.

Theta decay accelerates as expiration approaches, it does not increase linearly. Very high DTE options exhibit slow time decay, while very short DTE options expose traders to rapid directional and Gamma risk (particularly when options get closer to At The Money). The 28–32 DTE range offers a balance because you obtain meaningful time decay without excessive Gamma acceleration, you collect sufficient premium to justify risk, and there is enough time for modest price fluctuations to normalize over the 28-32 day period. Many people trade 5-7 DTE options, but in that range, you have no time to recover if the underlying’s price moves down quickly. When we ladder trades over 28-32 days that expire each week, this window allows Theta holistically across the portfolio to work steadily in our favor.

We achieve Delta control and flexibility at trade entry. Put Path trades typically carry low Delta (-0.15), resulting in limited directional exposure. We are profitable when the underlying goes up, when it stays the same, and when it declines marginally with the period of performance. With roughly 28 days remaining, price movements have time to mean-revert, and Delta changes are more gradual. This contrasts with the current fad of 0 DTE options or other very short-dated options, where small price moves can dramatically change risk. Understanding how the option Greeks evolve over time is essential to managing our short premium positions effectively. These Put Credit Spreads typically go through 3 phases throughout the trade life cycle:

1. Opening Phase (32-21 DTE): this phase is forgiving and ideal for entry, as the position can absorb normal market noise without significant stress.
   • Theta decay is present but moderate
   • Delta responds slower to price changes
   • Gamma risk is minimal
2. Middle Phase (21-14 DTE): this is often where profits accumulate most efficiently, provided the underlying remains stable.
   • Theta decay starts to accelerate
   • Delta becomes more sensitive to price movement
   • Gamma begins to increase
3. Closing Phase (14-0 DTE): As expiration approaches, risk can accelerate in this phase, so we need to monitor our positions closely late in the cycle.
   • Gamma risk increases sharply
   • Delta can change rapidly
   • Theta is highest and accelerating

This Greek behavior reinforces why laddering trades and entering earlier in the expiration cycle (28-32 DTE) are essential components of risk management. We monitor our positions daily, particularly as expiration approaches in the Closing Phase, to ensure we close any risky positions at a 200% max loss. Rising Gamma is a signal to reassess risk, and take it off the table if we hit the 2X loss…immediately. The Put Path system is not built on market prediction, stock analysis, or technical analysis. It is built on structure, probability, and risk awareness. By laddering trades, targeting 28-32 DTE, while understanding how the Greeks evolve, we adhere to a process that emphasizes consistency rather than excitement. The goal is not to maximize short-term returns, but to avoid huge losses while allowing time decay to do the heavy lifting, allowing us to consistently hit our profit targets long-term.

If you want a Put Credit Spread framework that prioritizes risk management, repeatability, and long-term consistency, click here to explore how the Put Path system applies these principles in practice.