Hi: I have a few questions: 1. - For people that do 2-4 week trades on average how long does it take for you guys to exit? 2. - What about for 4-6 week trades? 3. - And lastly 6-8 week trades? TIA
LOL.... Okay let me re-phrase this. I'm currently learning about options..... What I'm interested in is short term trades (covered calls). I would like to do some different trades in which I could enter & exit within the following time frames: 1. 2-4 weeks 2. 4-6 weeks 3. 6-8 weeks What I would like to know is at what time should I be looking at exiting for each one of these times frames? For those of you who have traded covered calls within these time frames....on average when did you exit?
Okay, I think I understand. I think most people who use covered calls wait until expiration and either let the calls expire or let the stock get called away. I assume you're trying to generate income from time decay. Since you're getting the most rapid time decay from the nearest months that would mean your trade lasts roughly 4 to 12 weeks. Usually the easiest part of options trading is picking a trade and diving in; it's managing the trade and its evolution over the life of the position that's the really difficult part. It's probably a good idea to have a lower preset stop on the stock price at which point you sell the stock and buy back the call. I hope this helps.
May I ask why covered calls? Do you already hold some stocks and wanna write some covered calls against them or do you actually wanna do buy-writes (i.e. buying the stock just to write covered calls)?