Narrow Wing IC

Narrow wings are actually more beginner-friendly in some ways: lower per-contract risk, works in low IV, and teaches active management. However, wide wings are more forgiving of mistakes. Start with narrow on paper, then small live positions.

Max loss = Width - Credit. With $1 width and $0.27 credit, max loss is only $0.73 per contract. This is a feature, not a bug - it lets you trade more contracts for the same dollar risk.

With 16-delta short strikes, you'll hit max loss roughly 15-20% of the time if you hold to expiration. With active management (closing at short strike), you may avoid some max losses but accept smaller losses instead.

Yes, iron condors (narrow or wide) are defined risk and TFSA-eligible. Your maximum loss is known upfront, making them acceptable for registered accounts.

Some Canadian options have $2 increments for certain strikes. Use the narrowest available width. For US options, $1 increments are standard for major ETFs like SPY and QQQ.

Significantly. Trading 10 narrow contracts vs 3 wide contracts can mean 3× more commission costs. Ensure commission is <30% of expected profit. Use low-cost brokers (IBKR) for narrow wing strategies.

Weekly offers faster theta but higher gamma risk. Monthly gives more time but ties up capital. In high IV, weekly works well. In moderate IV, monthly provides more buffer. Match to your management style.

With 10+ contracts, you can exit in portions: close 50% at 25% profit, remaining at 50% profit. This locks in some profit while letting the rest run. Wide wings with 2-3 contracts don't allow this flexibility.

Close the tested side immediately. With only $1 to max loss, there's no room to 'wait and see.' Close the losing spread, keep the winning side, and accept the partial loss. Don't try to roll within the narrow width.

Narrow wing gamma is 50-67% higher at short strikes and accelerates faster as expiration approaches. This is why narrow wings should be closed by 5 DTE regardless of P&L.

EV = Σ(Probability_i × Outcome_i) for all scenarios. Include: full profit (57%, +$13.50), partial profit (12%, +$5), partial loss (11%, -$25), max loss (20%, -$73). Adjust probabilities based on your actual data.

Use actual average win and loss from your trades, not theoretical max. If avg win is $15 and avg loss is $40 (due to management): Breakeven = $40/($15+$40) = 73%. Track your real outcomes for accurate calculation.

Sum all position Greeks. Target: aggregate delta near zero, cap aggregate gamma (e.g., -100 max), maintain positive theta. If portfolio delta drifts, bias next condor entry to rebalance. Close positions creating excess risk.

Adjust targets as DTE decreases: 50% at 30+ DTE, 40% at 20-30 DTE, 30% at 10-20 DTE, take any profit at 5-10 DTE. Less remaining theta means lower expectations as time progresses.

Need 50+ trades minimum. Calculate: Win rate, average win, average loss, profit factor (>1.2), Sharpe ratio. Compare to risk-free rate. Segment by conditions (IV level, underlying). If edge isn't clear after 50 trades, it likely doesn't exist.