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Carley Garner joins the Desire To Trade podcast to unpack how a veteran futures and options trader thinks in real time. Host Etienne Crête digs into Carley’s contrarian bent, her roots as a Las Vegas-based broker, and why her book Higher Probability Commodity Trading struck a chord with retail traders who want rules, not hype. If you’ve wondered how professionals actually use seasonals, sentiment, and spreads around crude, grains, currencies, or the S&P, this interview is money.
In this piece, you’ll learn Carley’s practical framework for option selling: think like an insurer, sell when volatility spikes, use spreads for defined risk, and avoid crowded, quiet markets. We’ll cover her playbook for timing entries, why minis/micros are a smart on-ramp, how to read COT and sentiment extremes, and the risk guardrails that kept her in the game after painful lessons (hello, holiday liquidity). Expect clear examples you can steal today—structure, sizing, patience, and simple tactics you can run on a small account without torching your nerves.
Carley Garner Playbook & Strategy: How She Actually Trades
What she trades and why it suits her edge
Carley focuses on liquid futures and options where spreads are tight and events move price: energies, metals, equity indices, currencies, and some grains. The goal is to harvest premium from fear and stretch, not to predict every tick.
- Trade options on futures for: crude oil, gold, S&P 500, euro FX, and select grains; skip thin contracts with wide bid/ask.
- Require minimum average daily volume (ADV) that keeps option markets tradable; if the options are ghost-town thin, pass.
- Use micros/minis to right-size risk when testing a new market or when volatility spikes.
- Avoid correlated overexposure (e.g., crude + heating oil + gasoline at once). Max 2 positions in the same theme.
Core edge: sell premium like an insurer (but define risk)
Her bias is contrarian and premium-selling: when markets stretch and implied volatility jumps, she looks to be the insurer, while capping tail risk. The win rate comes from time decay; survival comes from defining the worst case.
- Favor vertical credit spreads (bear call or bull put) over naked short options; always know max loss before entry.
- Sell when IV rank/percentile is elevated relative to the last year; if IV is cheap, prefer long-debit structures or skip.
- Target short options 1–2 standard deviations OTM with ≥65–75% probability of expiring worthless.
- Keep per-trade defined risk ≤ 1–2% of account; total portfolio “heat” (sum of max losses if all spreads go to max pain) ≤ 6–8%.
- Enter in small tranches (e.g., thirds) rather than all at once to reduce timing risk.
Timing the setup: stretch, sentiment, seasonals
She doesn’t guess tops or bottoms. She waits for a stretch confirmed by volatility and sentiment extremes, then structures a risk-defined fade.
- Require at least two of three: (1) price stretched to multi-week extremes, (2) volatility spike, (3) sentiment/COT extreme or seasonal tendency.
- If the market is grinding quietly with low IV, do nothing; the edge is in dislocations, not calm.
- Avoid the first move after a big report; let the first impulse print and fade the second/third push with spreads.
- Time windows sweet spot: 30–60 DTE for premium sells; shorter than 20 DTE only if IV is very high and spreads still price well.
Entry rules: convert the view into a structure
Entries are mechanical: pick the side, pick the distance, define risk, and stage orders. No heroics.
- For bearish fades after a panic rally: sell a call credit spread with a short strike above recent swing/high-volume node.
- For bullish fades after a flush: sell a put credit spread with a short strike below the recent swing/volume shelf.
- Distance guideline: place a short strike outside recent ATR × 2–3 from spot; it should survive “typical” chaos.
- Price the spread to collect at least 1/3 of its width (e.g., collect ≥0.33 on a 1.00-wide spread) or skip.
- Place GTC limit orders for staged entries; if only the worst price fills, reduce size or pass.
Risk sizing & portfolio construction
Sizing rules keep one bad print from wrecking the month. Diversification is by market and expiration, not by opinions.
- Cap single-trade defined risk at 1–2% of account; beginners use 0.5–1%.
- Limit to 3–5 concurrent spreads across unrelated markets; stagger expirations by 1–2 weeks.
- Net directional exposure: keep total delta (approximated) within ±0.5 per $1k of equity unless intentionally leaning.
- If volatility regime changes (VIX or market IV jumps), reduce new position size by 25–50% until conditions stabilize.
Trade management: simple, rules-first adjustments
Management is about harvesting decay and neutralizing risk, not “being right.” She takes profits early and cuts risk sooner than ego wants.
- Profit-take at 40–60% of max potential profit; don’t wait for pennies—free up margin and attention.
- Hard defense: if spread value doubles from entry credit (e.g., sold for 0.40 and now 0.80), reduce or exit.
- Soft defense: if underlying breaches short strike on a news spike, halve size first, then re-evaluate structure.
- Roll only to improve stats (more credit, further OTM, more time) and only if the thesis still stands; otherwise, close.
- Never add width to a losing defined-risk spread; if adjusting, do it for a net credit or flatten.
Event and calendar filters
Reports, holidays, and roll periods change behavior. She filters aggressively to avoid getting paid pennies for headline risk.
- Avoid initiating short-premium positions right before major scheduled reports for that market (e.g., OPEC meetings, FOMC for indices/currencies, crop or inventory releases).
- Holiday weeks and thin overnight sessions: reduce size or skip; slippage risk is real.
- If carrying risk into a known event, use smaller spreads further OTM and consider partial hedges (cheap long options).
Volatility playbook: what to do in low vs. high IV
Edge shifts with volatility. She adapts the structure so the math still favors her.
- High IV: favor wider credit spreads further OTM; take profits faster (at ~40–50%).
- Medium IV: standard credit spreads with normal distance; standard targets.
- Low IV: avoid short premium; consider calendars/diagonals or small directional debit trades tied to technicals.
Technicals she respects (kept simple)
No indicator soup—just clear levels, volatility, and “where traders are trapped.” The goal is to sell where pain is less likely to reach.
- Use swing highs/lows, prior day/week extremes, and obvious volume shelves as reference for strike placement.
- Respect ATR: keep short strikes beyond 2–3× daily ATR from spot at entry when fading extremes.
- Confirm stretch with momentum failure (e.g., lower high after a vertical rally for call spreads; higher low after a flush for put spreads).
Sentiment & positioning checks
She wants to be the insurer when others are stretched. Quick sentiment checks help avoid leaning with the crowd.
- Look for retail exuberance or panic in the traded market (spike moves, one-sided narratives).
- Prefer setups where positioning data or seasonal tendencies align with the contrarian fade; skip when they disagree.
- If sentiment is mixed or unclear, reduce the size or wait for a cleaner stretch.
Execution & order tactics
Great ideas still need fills. She treats orders like part of risk management.
- Use limit orders; work mid-price, nudge toward market in small increments; never chase illiquid strikes.
- If spreads are too wide to fill near mid, switch to a nearby, more liquid strike pair or pass.
- Don’t stack multiple new trades in the same hour; give fills and price behavior time to confirm.
Record-keeping and reviews
Consistency comes from logs, not memory. She treats each trade as a test of her rules.
- Log every trade: market, thesis, strikes, DTE, credit, IV, exit reason, P/L.
- Weekly review: flag any violation (sizing, IV filter, event filter); adjust rules only after a cluster of evidence.
- Keep a “no-trade list” of contracts/strikes/times that repeatedly cause slippage or difficulty.
Common mistakes she avoids
Most damage comes from preventable errors. She builds fences around them.
- Selling naked options in ultra-volatile products (e.g., natural gas) without a defined hedge—don’t.
- Letting a small credit spread morph into a directional bet; if you want direction, structure a defined directional trade.
- Averaging into losers to “fix” probability; size correctly upfront and respect max-loss boundaries.
- Trading out of boredom during low-IV chop; her edge lives in dislocations, not quiet markets.
Scaling up the right way
As account size grows, she scales rules, not ego. The framework stays the same.
- Increase contract count slowly after 3–4 consecutive rule-clean months; never after a hot streak alone.
- Keep per-trade risk percentage stable; size grows with equity, not with confidence.
- Diversify across uncorrelated markets and expirations rather than stacking size in a single idea.
Start With Risk: Size Positions Small And Define Worst Case
Carley Garner is blunt about it: the only edge that compounds is survival. Before she talks entries, she talks math—how much you can lose if you’re wrong, and whether that loss keeps you in the game tomorrow. She wants traders thinking like actuaries, not fortune-tellers: pick the structure first, know the max pain in dollars, and make sure it’s a number your account and your nerves can handle.
In practice, that means keeping individual trade risk tiny and portfolio “heat” under control. Carley Garner prefers defined-risk structures, so the downside is capped before the order hits the book, and she scales with micros or fewer contracts instead of hoping volatility calms down. If the numbers don’t fit—credit too small for the width, or the stop would sit inside normal noise—she passes and waits for a better setup. The result is boring by design: smaller bites, cleaner exits, and a trading life that can survive bad prints, news shocks, and your own humanity.
Sell Premium When Fear Spikes, Not During Quiet Markets
Carley Garner teaches that premium selling works best when the crowd is scared. Fear pushes implied volatility higher, so option prices get fatter and time decay pays you faster. When markets are calm, the premium is too thin to justify the headline risk you’re taking. So she waits for breakouts, news shocks, or one-way squeezes to hand her an edge.
The play is simple: structure defined-risk credit spreads one to two standard deviations out and let theta do the grind. Carley Garner then targets quick wins, taking profits around half the credit before headlines flip the script. If the move keeps running, she reduces in size or exits rather than trying to be a hero in a low-odds fight. In quiet regimes, she does less, shifts to debit structure, or sits on her hands, because patience beats forcing trades when the insurer’s payout is tiny.
Diversify By Market, Strategy, And Expiration To Smooth Equity Curve
Carley Garner pushes diversification that actually reduces pain, not just adds tickers. She spreads risk across uncorrelated markets—crude, gold, currencies, indices—so one theme doesn’t dictate her week. Then she mixes structures: credit spreads for decay, occasional directional debits when volatility is cheap, and small calendars when time structure helps. The goal is simple: multiple edges working in parallel so no single trade or headline hijacks the P&L.
Carley Garner also staggers expirations, so time risk isn’t concentrated on one Friday. She aims for different DTE buckets, which makes exits and adjustments calmer and more deliberate. Correlation gets capped, with a hard limit on how many positions point at the same macro driver. Portfolio “heat” stays measured, because diversification only works if the combined worst case still lets you play tomorrow.
Let Mechanics Lead: Rules For Entries, Exits, And Adjustments
Carley Garner keeps discretion on a leash with a simple, repeatable checklist. She won’t enter unless the setup meets prewritten criteria: elevated volatility, price stretched, and a spread that puts the short strike beyond normal noise. She prefers 30–60 days to expiration for clean decay and avoids structures that don’t pay at least a third of the width. If fills require chasing far from mid, she sizes down or passes. Carley Garner wants the trade to “make sense on paper” before it ever meets the market.
Her exits are equally rule-driven. She harvests around 40–60% of the maximum profit instead of squeezing the last nickel. If a spread doubles in value against her or the underlying breaches the short strike with momentum, she cuts or halves first and asks questions later. Rolls are only taken for a net credit, more time, and a safer distance; otherwise, she flattens and logs the lesson.
Use Spreads Over Naked Options To Cap Tails And Sleep
Carley Garner is crystal clear: undefined risk ruins traders, defined risk keeps them in the game. She favors credit spreads—bear calls or bull puts—because the long option caps the disaster, turning unknown tails into a known number. That single choice changes everything: margin is predictable, exits are calmer, and you won’t wake up to a margin call because crude gapped on headlines or gold ripped in Asia.
Carley Garner also treats spread design as a craft. She places short strikes beyond two to three ATR from spot, then chooses widths that balance premium with a manageable worst case. If the credit isn’t at least a third of the width, she skips it; if the market is too jumpy for fills near mid, she sizes down or waits. She never widens a spread to “fix” a loser—adjustments must improve distance and bring in credit, or she flattens. The result is boring on purpose: smaller wins, fewer disasters, and a trading rhythm that compounds without drama.
Carley Garner’s core lesson is simple: trade like an insurer, survive like a pro. She favors harvesting time decay when fear makes options expensive, not when markets are quiet and premiums are thin. The path matters more than the textbook stats—most options may expire worthless, but the swings before expiry can be brutal. That’s why she sizes small, chooses liquid markets, and treats patience as a position. When volatility spikes, she sells far-out spreads with enough distance to live through “normal chaos,” prefers 30–60 days to expiration, and takes profits early rather than chasing the last nickel.
She’s adamant about defined risk and calmer execution. Spreads beat naked options because the worst case is known, the margin is predictable, and sleeping at night is a strategy edge. Newer traders can use micros and minis to learn the rhythm with less damage potential, then graduate to options with rules that cap portfolio “heat.” Avoid forcing trades in low-IV grind, don’t chase fills in illiquid strikes, and let events and extremes do the heavy lifting. In short: wait for dislocations, structure risk before opinion, and let small, repeatable wins compound while the crowd wagers on miracles.
