Selling far OTM options on expiration day

Discussion in 'Options' started by shadaj, Jul 28, 2001.

  1. shadaj


    Made a small profit selling naked otm options last fri. and let them expire. Seems like easy $. Anyone else doing this?
  2. Unless you're selling a ton of contracts, it turns out to be chump change, since on expiration day any OTM options are going to be priced at next to nothing. Only the most volatile stocks would have OTM options that would have any decent premium left on expiration day to sell.

    A current favorite strategy of mine in this rangebound market is to do naked option strangles, which takes advantage of the relative lack of momentum.
  3. Babak


    kind of a dangerous startegy in my opinion

    you pick up pennies and then get hit for dollars on the loss side

    reminds me of how people kept selling puts in 87 with the same security of GICs....until October

  4. trinfo


    The market is smart enough to price those far OTM according to what they are likely to be worth - usually nothing. Better strategy might be a short straddle or strangle on an expected pin strike.