Monthly Expiry

Start with monthly options. They're more forgiving with lower gamma, give you more time to learn and adjust, and have better liquidity. Master monthlies before adding weeklies to your toolkit.

Conservative allocation is 25-35% of your account in active monthly positions. Keep 40-50% in cash for adjustments, new opportunities, and to survive losing streaks. Never go 'all in' on options.

If in-the-money, XJO options cash-settle automatically. Equity options may result in assignment (physical stock delivery). It's generally better to close before expiration to avoid assignment risk and capture remaining time value.

Higher IV Rank means options are relatively expensive, so you collect more premium when selling. It also means there's room for IV to decline (IV crush), adding to your profits. Selling when IV is already low leaves little room for improvement.

Monthly options give you time. If challenged in the first week with 3-4 weeks remaining, the underlying might recover. Monitor the position, have adjustment rules ready, but don't panic immediately. This 'time buffer' is a key monthly advantage.

Roll if: Your thesis is still valid, you can roll for a credit or small debit, and more time will help. Close if: Thesis is broken, rolling requires significant debit, or you've hit your stop loss. Never roll just to avoid taking a loss - that can compound mistakes.

Expected Move = Price × IV × √(DTE/365). For XJO at 7,500 with 18% IV and 30 DTE: 7,500 × 0.18 × √(30/365) = 7,500 × 0.18 × 0.287 = ~387 points. Place short strikes outside this range for higher probability.

Yes, generally. Research shows closing at 50% profit captures most of the edge while avoiding gamma risk in the final weeks. You can always re-enter a new position for the next month. Holding for the last 50% exposes you to more risk for less additional reward.

Options: 1) Skip entering that week, wait until after RBA. 2) Use wider strikes to account for potential gap. 3) Reduce position size. 4) Close existing positions before RBA if nervous. The key is acknowledging the event and adjusting accordingly.

21 DTE: More conservative, avoids gamma acceleration, capital freed for next trade. 7 DTE: Captures more decay but faces higher gamma risk. If position is profitable at 21 DTE (50%+ of max), closing is often optimal. If not profitable, you're in trouble either way.

Combine short vega positions (iron condors, strangles) with long vega positions (calendars, diagonals, long options). Sum the vegas and adjust position sizes until portfolio vega is near zero. You'll then profit primarily from theta regardless of IV direction.

Broken wings (wider spread on one side) collect more credit by accepting asymmetric risk. For example, if bullish, widen the put spread (more credit) while keeping the call spread narrow. You take more risk on the side you believe is less likely to be tested.

In low IV: 1) Use debit spreads instead of credit spreads. 2) Trade calendars/diagonals to benefit from any IV expansion. 3) If selling, accept lower credits but use tighter strikes. 4) Reduce overall monthly allocation. 5) Wait for IV to rise before aggressive selling.

Group positions by sector/factor exposure and limit concentration. If XJO, BHP, and RIO are all similar (resource/commodity exposure), treat them as correlated. Diversify across sectors (financials, healthcare, consumer) and consider adding positions that benefit from market stress as hedges.

Weekly review is typical for monthly portfolios, with daily quick-checks for major moves. Rebalance when: aggregate delta exceeds thresholds (±0.15), vega is misaligned with view, or individual positions hit adjustment triggers. Don't over-adjust - transaction costs add up.