When volatility is low, option premiums shrink. For many traders, this can be frustrating—there’s less premium to collect, and the temptation to “force trades” grows stronger. But in reality, patience is also a position.
In this post, I’ll walk you through why I believe low VIX matters, the risks of overtrading in quiet markets, and how I personally adapt my strategy when implied volatility is suppressed, as it is today (VIX at 14.4)
Why VIX and IVR Matter
The VIX is often called the “fear index.” It reflects implied volatility in the S&P 500, which in turn affects option prices across the board.
High VIX (high implied volatility): Options are expensive, premiums are juicy, and we can sell strikes further out-of-the-money for the same credit.
Low VIX (low implied volatility): Options are cheap, premiums are thin, and it’s harder to sell far-away strikes without collecting pennies.
This is where IV Rank (IVR) becomes your best friend while scanning the option horizon. Instead of guessing whether volatility is “high” or “low,” IVR shows where current implied volatility sits compared to the past year.
As a rule of thumb, I prefer to sell premium when IVR is above 40% (with 25% preferably as a bottom). It gives me more premium collected, better probabilities, and a higher chance of profiting when volatility contracts back to its mean.
The trap of overtrading in low VIX time
When VIX sits around the lows (recently in the 13–15 range), traders may try to “make up for it” by:
Selling more contracts than usual
Taking strikes too close to the stock price
Ignoring diversification and piling into trades just to collect something
The result? Risk exposure balloons while the reward doesn’t. You’re selling nickels while taking on dollars of risk.
This is the classic trap that wipes out traders who don’t respect volatility. It is tempting to open trades, when you don’t have many, but…
My approach in low VIX times
I don’t stop trading completely, but I adapt, and focus on some key principles:
Stay Small
With less premium to collect, I size down (I usually trade a “one lot”). This way, I keep powder dry for when volatility expands.Be Selective
I only sell options in underlyings where IVR is elevated, even if the overall VIX is low. Not all stocks move the same way—some always carry more volatility.Roll and Adjust
Instead of opening a ton of new trades, I manage existing ones—rolling to extend duration or improve strikes. This keeps theta working without overexposing myself.Accept Lower Theta
My portfolio-level theta target is usually around 0.3 % of net liq. In low VIX times, it drops—sometimes under 0.1%. And that’s okay. It’s better to accept less income temporarily than to force bad trades.Patience as a Position
Doing nothing is also a choice. Just because the market is quiet doesn’t mean you need to chase action. In fact, sitting out in low IV environments often protects you from unnecessary drawdowns.
A quick example
In my current 4-account challenge, my delta/theta ratio recently spiked higher than I like, not because I was overly aggressive, but because fewer trades were on and my stock holdings carry positive delta. With VIX at 14, my theta is lower across the board.
Instead of forcing more positions, I accept that my daily decay is lighter and wait for better IV setups. When volatility expands again, I’ll have capital ready to deploy at much more favorable terms.
Final thoughts
Low VIX environments test discipline more than high-volatility ones. The temptation to chase premium is strong, but the edge in option selling comes from waiting for the right conditions, not trading for the sake of trading.
So if you find yourself frustrated by thin credits, remember: patience is part of the strategy.
If low VIX can make you restless, high VIX can shake you to the core. I have felt the emotional rollercoaster at least twice now when the VIX suddenly explodes, positions that looked safe yesterday are deep in the red today, account P/L swings violently, and emotions scream louder than the mechanics. It’s in these moments that traders panic-close at the worst time or oversize adjustments.
The truth is, volatility spikes are where the edge for option sellers really lies, but only if you’ve stayed disciplined in the calm periods. That’s why resisting the urge to overtrade in low VIX is so important. It keeps your capital intact and your mindset steady, so that when the VIX does inevitably jump, you’re prepared to take advantage of rich premiums instead of being forced into emotional decisions.
And if you want to see how I measure my own theta and delta/theta ratio daily, I use the spreadsheet I built for myself—it’s what keeps me mechanical and reminds me when to stay small.
What’s your go-to playbook when volatility is quiet—do you scale down, sit out, or lean into selective trades? Let’s share and compare in the comments.