How to Play Options Expiration?

Discussion in 'Strategy Development' started by DataCruncher, Mar 20, 2008.

  1. Has anybody know any particular patterns that repeat themselves on option expiration day? Some have said not to trade today because the options expiration makes stock movements more unpredictable.
  2. Yes I know tons of patterns that repeat themselves on options ex
  3. is the fact that OE is a day early this time making any difference in your strategies?
  4. Time decay is the greatest near options expiration.

    Some people sell naked options (unlimited risk), some sell straddles (both a call and a put).

    Others sell 2 Call options, hedged with long stock; or sell 2 put options hedged with short stock.
    This way you attempt to become delta neutral (stock directional movement), and profit from the negative theta (time decay).
  5. +theta
  6. Negative theta to the one who buys your options.

    Positive theta to you, option seller.
  7. You had it reversed in your previous post. You were selling synthetic straddles and referring to negative theta.