Range-bound, expecting price to stay within defined range
| Strategy Type | Neutral Options Income / Theta Decay |
| Market Outlook | Range-bound, expecting price to stay within defined range |
| Risk Profile | Defined Risk (Maximum loss known at entry) |
| Reward Profile | Limited Profit (Credit received minus commissions) |
| Time Horizon | Very Short-term (Weekly expiration, 5-7 DTE) |
| Iv Environment | Best when IV elevated but expected to decline; avoid very low IV |
| Breakeven | Upper short strike + Credit or Lower short strike - Credit |
| Primary Instruments | FTSE 100 Index options, UK large cap stock options, US-listed UK ADR options |
| Mas Compliance | MAS regulated brokers required; options trading approval needed |
| Trading Hours | FTSE options: London hours 4 PM - 12:30 AM SGT; US ADRs: US hours |
| Contract Size | FTSE 100 options: £10 per point; Stock options: 100 shares typically |
| Settlement | FTSE options: Cash settled; Stock options: Physical delivery |
| Tax Treatment | No capital gains tax for individuals in Singapore |
| Margin Requirements | Margin required for short options; defined risk reduces margin |
| Cdp Account | Not required for foreign options; custody with broker |
| Singapore Relevance | Weekly income generation provides consistent cash flow; defined risk suits conservative approach |
Four-leg neutral options strategy: Sell OTM put and call, buy further OTM put and call for protection. Profits when price stays between short strikes. Max profit = credit received. Max loss = wing width - credit.
Weekly options have rapid theta decay (time value erosion benefits sellers). Quicker return of capital, more trading opportunities. But also higher gamma risk - need active management.
Target >30% of wing width. For 25-point wings, minimum 7.5 points credit. This ensures adequate compensation for risk taken. Lower credit = Poor risk/reward.
Close at 50% profit (captured bulk, reduce gamma risk). Close at 200% loss (stop loss). Close 1 day before expiry (avoid pin risk). These systematic exits improve consistency.
Where current IV stands vs past year's range. IV Rank 50% = middle of range. Target 30-70% for iron condors. Too low = poor premium. Too high = expected move.
Target: Delta near zero, positive theta, negative gamma/vega. Monitor daily. If delta exceeds ±0.30, consider adjustment. Theta should decay as expected. Vega exposure means IV spike hurts.
Adjust when: Delta > 0.30 on one side, short strike breached, or unrealized loss > 100% of credit. Options: Roll tested side further OTM, close tested side, or close entire position.
Risk per trade (1-3% of account) / Max loss per contract. Example: 2% of S$50,000 = S$1,000. Max loss S$300/contract. Size = 3 contracts. Never risk more than planned.
Negative gamma = delta moves against you faster as price moves. Weekly options have high gamma. Near expiry, small price moves cause large P&L swings. Close early to avoid worst gamma.
OTM puts typically more expensive than OTM calls (skew). Can collect more credit on put side. May allow wider put spread. Consider when balancing iron condor sides.
Analyze skew (put vs call IV), term structure (weekly vs monthly), relative value (wings vs shorts). Identify optimal strikes beyond simple delta. Find mispriced options for edge.
IV typically exceeds realized volatility (VRP = IV - RV). Selling options captures this premium systematically. Iron condors profit from this fundamental edge when IV doesn't realize.
Low vol: Tighter strikes (20 delta), smaller wings, larger size. High vol: Wider strikes (12 delta), larger wings, smaller size. Crisis: Pause or minimal positions. Track regime daily.
Asymmetric wings (e.g., 30-pt put, 20-pt call). Creates directional tilt with protection. Use when slight directional view develops or to adjust threatened position.
Allocate 20-30% to iron condors for income. Sum Greeks with other positions. Diversify across underlyings. Rebalance based on IV. Iron condors complement growth positions.
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