What Is the Buffer Effect?
When you sell a strangle with strikes at round numbers (e.g., SPY 580/590), you get a natural buffer: the psychological resistance at those levels acts as a ceiling and floor that prices tend to bounce off of.
We call this the Buffer Effect, and our 5-year backtest shows it saves 32% of trades that would otherwise hit your strike.
The Data
We compared two groups of strangles over 5 years:
- Rounded strikes (ending in 0 or 5): Win rate of 82.1%
- Non-rounded strikes (ending in 1-4, 6-9): Win rate of 74.3%
That 7.8 percentage point difference translates to roughly 32% fewer losing trades when using rounded strikes.
Why It Works
Round numbers act as psychological support and resistance levels. Large institutional orders cluster at these levels. Market makers hedge more aggressively near round numbers. The result is increased buying/selling pressure that pushes price back toward the center.
How to Use This
- Always prefer round strike prices when selling strangles or iron condors
- Use $5-wide strikes on SPY rather than $1-wide for maximum buffer
- Combine with volume analysis — a round-number breach on high volume is more likely to be real
Conclusion
The Buffer Effect is free edge. It costs nothing to choose round strikes, and it measurably improves your win rate. Combined with volume-based signal detection, it's one of the simplest improvements you can make to any options selling strategy.
Test the Buffer Effect yourself with our backtesting engine — compare round vs non-round strikes on any strategy.