DislikedScattergood,
Also, for scenario 1 (equal distance) short strangle:
Better if I set it up by the delta, say Sell Call at delta=0.2 and Sell Put at delta=0.2?
OR
Better if I set it up by pips distance, say Sell Call at 400 pips above the current strike, and Sell Put at 400 pips below the current strike?
Do you have the experience to share it?Ignored
As to how much to have in the account, I would have multiples of the margin required to maintain the position at the either strike. Like 4-10x. That way you can absorb the loss on the position as the underlying moves up to the strike as well as the increase in the margin requried to maintain the position.