Basic Points

• Whenever a trader is net short options, a credit is being collected, which is cash income on a position as a result of the theta (time decay of an option).
• The dynamic here is to try and collect more from theta than is being lost from sharp moves in realized volatility (the percentage range over a period of time based on historical prices with 68.3% confidence), or temporary trading losses from spikes in implied volatility (the percentage range over a year based on option prices with 68.3% confidence). 
• This is known as premium selling or simply “selling vol” and is attractive to traders because it generally has a higher accuracy than being long options, but at the cost of a higher max loss and smaller max gain. 
• Without proper understanding and risk management, premium selling can not only bring an account value to zero, but create losses in excess of the total account value, requiring a margin call (an obligation to deposit more money to cover losses). 

Expert: Tactics

The days are long gone when premium can be sold blindly with the expectation of profits. It must now be done in an informed way with the timing and relative expensiveness of implied volatility. “The only reason we choose a short-volatility strategy is that we think implied volatility is too high” (Sinclair, 2020, p. 107). Among the various ways to evaluate this is with RV forecasts like GARCH, comparing implied to exponential moving averages, examining the VRP (volatility risk premium) on various timeframes, and studying skew (differences in implied volatility on different strikes for the same date).

If the risk is undefined such as if there is a frontspread or other strategy with unchecked short options like a short straddle or short strangle, then there can be unlimited tail risk (catastrophic but low risk outcomes) which is something that should have a plan connected to it to manage that risk.