Writing On Thur and Fri Before Exp Week.

Discussion in 'Options' started by Arnie Guitar, Nov 9, 2006.

  1. I've always felt the the Thursday and Friday before expiration week were a good time to write OTM options. Granted, most equities' OTM options have very small premiums with so little time left, but not all. It seems that the untradeable Sat and Sun still leave enough time for people to have hope of a decent move, but on the following Mon and Tue, most hopes fade, and premiums disappear.

    Yes, I'll be writing today and tomorrow.
  2. Arnie

    Do you have any data to back that up, or is it just a gut feeling?
  3. No data, just a gut feeling.
  4. ssmegner


    I have a friend who is a 15 year veteran market maker and floor trader. He says you can make some money but not much. They are trying to clean up their positions and you bring in new open positions. They realize it is only the scalpers doing this and you will not get very good prices. Somone is on the other side of that OTM option.
  5. Arnie

    For premiums to "disappear" other than in-line with Theta expectations, it would mean that the implied Vols must drop "Mon & Tue".

    Maybe they do, but I haven't noticed it.
  6. The only OTM options that have decent premiums left in them are the ones with earnings coming up. So before you enter your trade check to see when earnings are. One bad trade could blow out your account unless you protect yourself with a Credit Spread.

    Which stock do you have in mind?
  7. jllm03


    I have taken advantage of this a couple time for a quick "Gift" premiums. Set up a credit spread on a Friday, and then carry it for the next couple days.
    I did that on SEARS (SHLD) right before it's last earnings release.
    Done it on GOOG also. Same thing...a credit spread about 40-50 point OTM. Grab a little premium for only a couple days of hold time, but it is what we are here for in the first place...to make money!
  8. .

    Stocks with any decent OTM option premiums this close to expiration usually have to trading in the hundreds, not below.

    I did enter a credit spread today...we'll see how it goes.
    Hopefully I'll pocket the $470...(50 cent prem., 10/10 contracts minus comm)

    Yes, I have my head covered with aluminum foil....
    they're watching, you know...:p
  9. On a percentage basis you will find that the option prices on a $50.00 stock compared to a $500.00 stock is almost the same. Margin required to short 1 contract on the $500.00 stock will be the same as 10 contracts on the $50.00 stock.

    GOOG and SNDK could be used as an example.
  10. jj90


    ICs or credit spreads on indicies placed on Fri before expiration week is something you may want to look at Arnie.
    #10     Nov 10, 2006