Frequently asked
questions.

Assignment means the option buyer exercises and you must honor the contract: a short put means you buy 100 shares per contract at the strike; a short call means you sell (or have called away) 100 shares at the strike. It generally only matters when the option is in the money near expiry. Each trade shows a modeled assignment probability and an “assignment watch” exit rule. Only sell cash-secured puts on names you’d be genuinely happy to own at the strike.

American-style equity options can be exercised any time. Early assignment is rare unless the option is deep in the money or there’s a dividend: an in-the-money short call is most at risk right before an ex-dividend date when the dividend exceeds the call’s remaining time value. We flag that dividend-vs-extrinsic risk on affected trades. Cash-settled index options (like XSP) can’t be assigned early into shares.

Rolling means closing your current option and opening a new one — usually further out in time, and often to a safer strike — ideally for a net credit. It’s a way to give a challenged position more time or move your strike away from the money. Our exit rules suggest a time check around 21 days to expiry, where you’d typically close or roll rather than ride gamma into expiration. Rolling is not a guaranteed repair — sometimes taking the loss is the better trade. See why we avoid the final weeks.

A cash-secured put’s only cushion is the credit you collect — below your breakeven (strike minus credit) losses grow like owning the stock, so size positions to what you can afford to be assigned. Defined-risk spreads and iron condors cap your maximum loss by pairing your short option with a long one, at the cost of a smaller credit — that’s the trade-off the “Capped risk” mode in the Income Finder exists to show. We also gate out high-crash-risk regimes and require positive expected value.

Empty is a feature, not a failure. Every scan runs a series of safety gates before showing anything: a market-wide regime check (in high-crash-risk conditions we surface no new short-premium ideas), volatility gates (if premium is cheap for the name or options aren’t pricing more movement than the stock delivers, selling is poorly compensated), an earnings gate (we don’t recommend selling single-stock premium through an earnings report), plus liquidity and positive-expected-value filters on each contract. The scan always tells you which gate stopped it and why — and an empty list usually means the best trade today is no trade. See the market’s weather report.

Before evaluating individual contracts, the engine reads the broad market: the volatility term structure (inversion signals acute stress), short-dated volatility (the earliest warning), the overall level of fear, volatility of volatility, and high-yield credit spreads (credit stress tends to lead equities). These combine into a green/yellow/red light shown on every scan, with the reasons spelled out. How the weather report works.

We price each contract with Black-Scholes at market implied volatility and compute the probability of finishing on the profitable side including the credit. Crucially, a high win rate alone isn’t enough — every trade must also clear a positive expected-value filter. See why a 92% win rate can still lose money for the intuition, and the Methodology for how we back-test whether our stated probabilities actually hold up out of sample.

Options tend to price in more future movement (implied volatility) than stocks end up delivering (realized volatility) — option buyers, on average, overpay for protection the way insurance buyers do. That persistent gap is the volatility risk premium, and it is the structural reason selling options can have a positive expected value. When the gap isn’t there, the engine declines to sell. The seller’s edge, explained.

Broad-based index options such as XSP get IRS Section 1256 60/40 treatment (60% long-term, 40% short-term) regardless of holding period; single-stock option premium is generally short-term. Every figure in the app is shown after tax using the rates in your Tax Settings. Watch for wash sales when you realize a loss and re-enter a substantially identical position within 30 days. This is general information, not tax advice — consult a professional. The after-tax lens.

No. It’s an educational tool for exploring option-income ideas with modeled probabilities and after-tax estimates. It is not investment, tax, or legal advice, and Nest Money is not a registered investment adviser or broker-dealer. You place and own every trade at your broker. See the Disclosures.