Monthly Expiry

Monthly trading spans 3-4 weeks with lower gamma and more stable positions. Weekly trading is faster with higher gamma. Monthly requires less frequent monitoring (2-3x per week vs daily) but ties up capital longer. Choose based on your availability and temperament.

Yes - liquid Canadian single-name expiries are overwhelmingly monthly. Stick to the most liquid ~20-30 names (Big Six banks, large energy, Shopify, Brookfield), use wider strikes than XIU (single names are more volatile), and never hold through earnings. Start with 1-2 single-name positions alongside your index trades.

Target 2-4% monthly on deployed capital, which translates to 20-40% annually. This assumes 70% winning months with proper position sizing. Don't chase higher returns - they come with proportionally higher risk.

Start with one index position (XIU). Add a single-name position after 2-3 months of experience. Maximum 3-4 positions to manage effectively, and watch the XIU/bank overlap so you aren't doubling up on financials. Quality over quantity.

Options settle at their intrinsic value (ITM) or expire worthless (OTM). XIU and single-name options are American-style and physically settled, so ITM shorts can be assigned. Holding to expiry also exposes you to elevated gamma risk in the final week and pin risk on expiry day. Better to exit by 7 DTE.

Map all events at month start. If events cluster, either skip the month or use much wider strikes and smaller size. Consider splitting the month into pre-event and post-event trades rather than one position through everything.

Roll if: Position is profitable, you want continued exposure, market conditions still favorable. Close if: Profit target met (why take more risk?), position is stressed, or you're uncertain about next month. Don't roll losing positions hoping to recover.

IV percentile below 25%: Premium is low, vega headwind risk - consider waiting or using weekly instead. 25-75%: Normal zone, good for monthly trades. Above 75%: Rich premium but elevated risk - use wider strikes, smaller size.

Diversification helps but remember XIU is ~40% financials, so XIU and bank positions are highly correlated - stacking them adds little real diversification. In market stress, all of it moves together. Better: Moderate diversification (2-3 positions) that genuinely spans sectors (e.g. add energy or materials), with proper sizing for each.

If underlying approaches short strike: 1) Roll that side further OTM, 2) Add premium on untested side, 3) Exit if significant breach. With monthly you have time to adjust - don't panic, but don't delay either. Act when underlying is within 0.5% of short strike.

Identify rich vs cheap points on surface. If put skew is steep (puts expensive), sell put spreads instead of iron condors. If term structure is inverted (current > next), use calendar spreads. If wings are expensive, sell strangles with far OTM strikes. Always compare premium to fair value, not just absolute level.

Total portfolio vega should be such that a 5% IV spike causes no more than 10-15% portfolio drawdown. For a typical monthly portfolio, this means vega exposure of roughly 2-3x daily theta. Enter in higher IV environments to have a vega tailwind.

Depends on term structure. If normal contango (next > current): Standard short current month. If inverted (current > next): Calendars or diagonals to capture term structure normalization. If flat: Go where theta is best, usually current month but compare.

Institutions run portfolio-level Greeks with strict limits. They hedge tails constantly, use index futures (e.g. SXF on the S&P/TSX 60) for delta management, and have systematic rules for every scenario. Key difference: They diversify across many more instruments and can hedge with products retail can't easily access.

Don't scale linearly. At C$25K: 1-2 positions, simple iron condors. At C$60K: Add single names, 2-3 positions. At C$125K: More sophisticated structures, tail hedging. At C$250K: Full portfolio management, professional risk controls. Each stage requires proportionally better risk management, not just more contracts.