Capital Allocation (Buckets)

Bucket	Capital	Role
High IV / Core Income	40%	Primary premium engine
Medium IV / Stability	30%	Reduce volatility drag
Defensive / Index	20%	Shock absorber
Dry Powder	10%	Rolls, assignments, crashes

A single regime change should not collapse income.

Example Monthly Construction

Bucket	Capital	Avg Δ	Monthly Yield
High IV / Core Income	40%	0.25–0.35	2.6%
Medium IV / Stability	30%	0.20–0.25	1.9%
Defensive / Index	20%	0.15–0.20	1.3%
Dry Powder	10%		1.3%
Opportunistic	Flex	Flex	1.3%

Assignment Is Part of the Plan

At 0.20–0.30 delta, expect:
    • 20–30% of positions touch
    • 10–20% assigned in volatile months

Assignment Rules (Discipline)
    • Assignment ≤ 30% of capital at any time
    • Convert assigned shares into:
    • Covered calls above cost basis, or
    • Short-dated calls to reduce exposure
    • Never force rolls just to avoid assignment

Assignment is inventory, not failure.

Rolling Framework (Critical)

Preferred roll conditions:
    • At 21–14 DTE
    • If option retains ≥30–40% of original credit
    • Roll out in time, not down in strike

Avoid:
    • Rolling weekly under pressure
    • Rolling for net debit
    • Chasing premium after losses

Drawdown Expectations

Even done well, expect:

Scenario	Impact
Mild pullback	−3% to −6% NAV
Normal correction	−8% to −12% NAV
Sharp selloff	−15%+ temporarily

The strategy survives only if capital is not fully deployed.

Why This Is Achievable

This works because:
    • 2% monthly is moderate, not extreme
    • Capital is diversified
    • Assignments are expected
    • Volatility does the work, not leverage

It fails when:
    • You demand no assignments
    • You concentrate into 1–2 tickers
    • You chase IV at market tops