Simulation. Not trading advice.
Inside the experiment
You sell one put: you collect a premium today, and if the price finishes below the strike you pay the difference. Most of the time nothing happens and you keep the premium. Sometimes you pay a lot.
Implied volatility, the market's guess of how much the price will move, sets the premium. Realized volatility, how much it really moves, sets what you pay out. Each glowing line is one possible future; red ones finish below the strike and cost you money.
The gauge shows IV ÷ RV, the ratio behind "vol-adjusted yield". Above 1 you are charging more than the risk you carry, so on average you win. Below about 1 you are underpricing the insurance, and the seller loses on average, even though most individual trades still look like wins. A 75% win rate can hide a losing strategy.
Switch to fat tails and the same realized volatility arrives as rare jumps. The average loss grows, so a ratio slightly above 1 can still lose. "Vol shock" doubles realized vol for a moment to show how fast the edge flips.