Think of a trade as a part of a portfolio rather than one specific position. A risk based margin account helps. Look for any efficiency or inefficiency in terms of implied vol against historical vol and exploit it. Understanding probabilities and the Greeks is imperative.
Totally agree with the portfolio view of risk rather than individual positions - unless you are really small. Back in the 80's when the OEX was really crazy lots of the folks in the pit and on the RAEs wheel would start out every month by buying a bunch of the lowest strike puts and the highest strike calls. They would scratch them off their sheets and manage risk and trade as if they weren't long the far OTM options.
Find a flat stock pick nearest expiration say $30 price, sell 25put and 35call same time. Atleast first 100% against is covered by the other side being up 100%. Then a break above 38 or below 22 you need to exit the losing position quickly. Make sure your playing 10 stocks min so your money is nicely spread out, if 1 goes 500% against you hopefully the other 9 should leep you in profit.
I really don't understand why people accept hearing the term "trading options " and "income" in the same phrase. Selling option is not an "income" strategy (oh boy, as if there were one....), it is a way to express a view about some factors embedded in its price (yes, you know.... expressed by the Greeks). So you manage the risk according to the reason you sold it in the first place. If you think volatility is overpriced.... you could delta hedge with the underlying. If you have a directional view, you could think at verticals, as they don't suffer too much for the IV dynamics. Buy all this is secondary: just remember to run away when somebody use in the same phrase the words "selling option for income..." and it will be all right!
When you sell naked options you are in the insurance business selling insurance. If, as some posters think that you can compete with market markers and other professionals with better tools inc. automated order entry and better routing of orders you will find out the hard way when the market makes extreme moves. Selling options because you have a directional bias is the height of hubris(ego) and a sure road to big loss and mediocre performance at best.
Selling 1 ATM put is always a less risky way to express directional bias than going long 100 shares of the underlying.
If you’re gonna sell the strangle you better know how to gamma scalp the adx otherwise you’re just throwing darts at a dart board hoping for a hit...