⚡ QUICK ANSWER: Option Selling Playbook Rules
The Option Selling Playbook identifies high-probability theta decay setups during Long Gamma market regimes (above ZGL). Selling credit spreads or iron condors is statistically favored when market maker hedging suppresses volatility and defends Call Walls and Put Walls, allowing options sellers to capture predictable premium decay.
1. The 3 Setup Conditions for Option Selling
- Regime Filter: Market must be in a NEUTRAL_PINNING or BULLISH_DAMPENED state. Net GEX in ₹ Cr must be strongly positive.
- ZGL Safety Buffer: Spot price must trade safely above the Zero Gamma Line (ZGL). A wide buffer between spot and ZGL ensures dealer hedging will continue to cushion selloffs.
- Wall Boundary Placement: Short option strikes must be positioned outside the primary Call Wall (resistance) and Put Wall (support) levels to maximize probability of expiring out-of-the-money.
2. Defined Risk vs. Undefined Risk
Quantitative options sellers prioritize defined-risk spread structures (Bull Put Spreads, Bear Call Spreads, Iron Condors) over naked short options to prevent catastrophic tail-risk losses during sudden market gap events.
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