Three structural regimes matter for options. Trending markets reward directional plays (long calls, long puts, vertical spreads aligned with the trend). Ranging markets reward neutral premium-selling structures (iron condors, short strangles, calendars). Crisis or shock regimes — where IV expands rapidly — punish premium sellers and reward long-volatility holders. Misreading the regime is the root cause of most strategy underperformance.
Practical signals for regime: trending markets show higher highs and higher lows on the daily, with realized volatility climbing modestly. Ranging markets oscillate within defined boundaries with declining IV. Crisis regimes show single-day moves of 2σ or more in major indexes, with VIX above its 90th percentile. Adjust your strategy mix to match the regime, not the other way around.