options-execution

Methodology fused from professional options trading frameworks; all text is an original paraphrase.

Defaults

Parameter	Default Value	Rationale
min_days_to_expiry	45	Buying strategies need time for thesis to develop
max_days_to_expiry_sell	45	Selling strategies capture theta decay in 30-45 day window
exit_dte_threshold	21	Exit or roll buying strategies before 21 DTE to avoid gamma risk
bid_ask_max_spread	5%	Illiquid options destroy edge through wide spreads
max_position_risk	2%	Maximum capital risk per single options trade

Preflight

Run canonical pre-flight per contracts/preflight.md. Include the X-Agentii-Trace header on every tool call per contracts/x-agentii-trace-header.md — carry the _run_id from your first tool result and name yourself (and your parent, if you were spawned).

Data Source Priority

1. Options execution framework — references/options-strategies.md (bundled strategy reference)
2. Upstream context — market structure from price-action + pattern identification from chart-patterns
3. Options setups — search_technical_setups(instrument_scope=["option"], ...) for matching against gold.technical_setups

Methodology

Retrieval Scope

structured_only

Retrieval Strategy

This skill follows Branch (d) Simple Lookup from contracts/retrieval.md: the strategy framework is bundled in references/options-strategies.md. Real-time data via get_realtime_quote. Matched options setups via search_technical_setups(instrument_scope=["option"]). No unstructured document retrieval.

Temporal Scope

See frontmatter temporal_scope block.

Tool Allowlist

See frontmatter allowed_tools.

Protocol

This skill implements a professional options execution framework. Options are treated as execution tools for expressing directional or volatility views with defined risk — not as standalone gambling instruments. The framework applies three mandatory filters (liquidity, cost, volatility) before any strategy selection. Detailed strategy definitions, the strategy→market condition matrix, and execution rules are in references/options-strategies.md.

Step 1 — Macro and Volatility Context

1. Assess broad market volatility via VIX or equivalent from get_realtime_quote.
2. Classify IV environment: High IV (> 70th percentile) → favor premium-selling strategies. Low IV (< 30th percentile) → favor premium-buying strategies. Mid-range → balanced.
3. Macro regime from upstream analysis: expansion favors longs, contraction favors shorts; high uncertainty favors straddle/strangle.

Step 2 — Directional Thesis Input

1. Receive Always In direction from price-action skill.
2. Receive primary pattern and confidence level from chart-patterns skill.
3. If no upstream context: derive from raw price data and fundamental thesis.
4. Classify thesis: Bullish / Bearish / Neutral / Direction-uncertain-large-move-expected.

Step 3 — Strategy Selection

Apply the strategy matrix to select the appropriate options structure:

1. Apply filters: Check liquidity (bid-ask spread), cost (premium vs position), IV environment.
2. Map thesis to strategy: Use the strategy→condition matrix in references/options-strategies.md.
3. Query pipeline setups: search_technical_setups(instrument_scope=["option"], pattern_type=<derived>) for matching strategy setups from gold.technical_setups.
4. Load full setup: get_technical_setup(setup_id=<best_match>) for exact parameters.
5. Fallback: Use manual strategy rules from the reference.

Step 4 — Execution Plan

1. Strike selection: OTM for directional (delta 0.40-0.60), ATM for straddles, OTM for strangles.
2. Expiry selection: 45-60 DTE for buying strategies, 30-45 DTE for selling strategies.
3. Position sizing: Risk/contract ≤ 2% of capital. For selling strategies, size on notional exposure.
4. Exit plan: Profit target, time stop (21 DTE for buys), stop loss level.
5. Invalidation: Conditions that void the trade (thesis break, IV regime change, liquidity deterioration).

Step 5 — Trade Plan Output

1. Strategy: Selected options strategy with justification from the matrix.
2. Contract Specs: Strike(s), expiry, type (call/put), net debit/credit.
3. Risk: Maximum loss in dollars and percentage of capital.
4. Reward: Target profit, probability of profit (if calculable).
5. Breakeven: Exact breakeven price(s) at expiration.
6. Management Plan: Roll/adjust/exit conditions.
7. Setup Match: If from gold.technical_setups, include setup_id and research_score.

Output File

{ticker}/{YYYY-MM-DD_HHMM}_options-execution_{affix}.md

Output Structure

1. Executive Summary — Selected strategy, market conditions, thesis alignment, key contract specs
2. Volatility Context — IV percentile, IV environment classification, implications for strategy selection
3. Directional Thesis — Price-action derived view, pattern context, confidence level
4. Filter Results — Liquidity check (bid-ask), cost assessment, IV filter outcome
5. Strategy Selection — Strategy matrix match, pipeline setup match (if any), justification
6. Contract Specifications — Exact strikes, expiry, premiums, net debit/credit
7. Risk and Reward — Max loss, max profit, breakeven(s), probability assessment
8. Management Plan — Entry timing, profit targets, time stop, adjustment triggers
9. Coverage Gaps — Data limitations, manual vs pipeline-derived parameters

Error Handling

Error	Fallback
No matching options setup from MCP	Use manual strategy rules from references/options-strategies.md; flag coverage_gap
IV data unavailable	Assume mid-range IV; flag as degraded
Bid-ask wider than 5%	Flag as low-liquidity; suggest alternative strikes or skip
No directional thesis from upstream	Derive from raw price data; flag as independently determined
search_technical_setups unreachable	Use full manual strategy matrix; flag all parameters

Memory Load

See contracts/memory-load.md.

Snapshot

See contracts/snapshot-synthesis.md.

Final Summary (TUI)

Include ### Key Citations block with 0-10 clickable /v/ URLs referencing matched gold.technical_setups entries.

References

• references/options-strategies.md
• contracts/citation-and-memory.md
• contracts/output-frontmatter-schema.md
• contracts/memory-load.md
• contracts/snapshot-synthesis.md
• contracts/preflight.md
• contracts/retrieval.md