RSI Filter: Sell Puts on Oversold Stocks, Calls on Overbought

What RSI tells you

The Relative Strength Index (RSI) is a 0–100 momentum oscillator. Conventionally:

• Below 30 = oversold (potentially bouncing)
• 30 – 70 = normal range
• Above 70 = overbought (potentially pulling back)

For wheel traders, RSI is a beautiful entry-timing tool:

• Sell cash-secured puts when RSI is low (you're getting paid to bet on a bounce).
• Sell covered calls when RSI is high (you're getting paid to bet on a pullback).

Where to find it

The RSI filter is in the sidebar of both screeners. It's a 0–100 range slider keyed to the 14-day RSI of the underlying stock.

Recommended ranges

For cash-secured puts (look for oversold):

For covered calls (look for overbought):

A worked example

You want to find puts on oversold names with rich premium:

1. Open the Put screener.
2. Set RSI to 0–35.
3. Set Delta to −0.30 to −0.15.
4. Set Volume ≥ 100 and Earnings Excluded = on.
5. Sort by Yield descending.

This is essentially the RSI Oversold preset without the preset wrapper.

Pairing RSI with the rest

• RSI + IV — oversold and high IV = the classic wheel entry.
• RSI + Moving Average — confirm the pullback is to a meaningful support level (50- or 200-day MA).
• RSI + Earnings — make sure the oversold isn't a pre-earnings selloff.

Common mistakes

1. Buying every RSI 30. Oversold can stay oversold for weeks during a real downtrend. Confirm with fundamentals before you commit.

2. Only using extreme thresholds. The strict 30/70 levels are conventional, not magic. Many traders use 35/65 to catch more setups.

3. Ignoring time frame. The screener uses 14-day RSI. Daily RSI tells a very different story than weekly RSI — keep that in mind for longer holds.

Where to go next

• Try the RSI Oversold preset.
• Layer with Stock vs 50/200 DMA filter for trend confirmation.
• Add Exclude Earnings so you're not buying a falling knife.