Expiration week trades, let's hear 'em
- Thread starter tradermike79
- Start date
I am certainly not "A", although I can see that short nature of many of my first posts could be misconstrued that way. I am by no means an expert and am actually quite humble as a trader; however, I have enough experience to know the difference between a cheap option in terms of IV relative to HV or forecast volatility, and a nickel or dime option. From the way your post read, I thought you were referring to the latter. In a round about way, I suppose you would consider me an RV trader, but during expiration I like to work form the short side-- I like to try to manage my delta and gamma while putting theta decay on my side (the fact this process is accelerated those last few days have been agreed upon in earlier posts in this thread.) Naturally, I will try to use options that I think are overpriced relative to recent price action and many of these plays are intra day scalps where I sell in the morning, manage the position, and buy back in the late afternoon so as to avoid overnight gap risk. You may not consider that an ideal way to trade expiration week, but I am comfortable with it. If you do not agree I respect your opinion but, again, I was hoping to generate some solid premium selling ideas with this thread.
Quote from stock777:
no one is interested in your trades, fake or otherwise AFTER the fact.
Since you will disappear into the ether when you blow up, we don't get to enjoy the ride.
I am not interested in ANY of your ideas EVER. Why don't you take your negativity elsewhere. Just because you have posted almost 10,000 times doesn't mean you are a good trader. All I know about you is that you are a jerkoff and should stay out of my thread. If I start a thread that is titled "A$%&(*)#@^ Welcome" feel free to post.
i dont know why people are being so hard on tradermike79. hes not selling anything. let him have his journal. time will tell how good his ideas are.
I agree .... could use some insight from those more experienced.
I am viewing the sell put strategy from the perspective of a discount stock acquisition plan and premium collection point of view.
I have a handful of stocks that I would be happy to own at a 15-20% (or more) discount. Writing puts seems a good way to earn some premium and if nothing else, cheaply scale in to a decent stock.
Case in point, Berkshire Hathaway B stock .... although the spreads seem really wide right now. Is there a good way of looking at this? There is a trade between margin use, to lock in premium (and hopefully see through to expiration) and account balance available in case I have to exercise (on expiration date).... expiration week or day seems to be a good time to put on more aggressive positions, since probabilities of a larger adverse move are lower over a few days or day, than longer periods (obviously) ....
Thoughts...??
I am viewing the sell put strategy from the perspective of a discount stock acquisition plan and premium collection point of view.
I have a handful of stocks that I would be happy to own at a 15-20% (or more) discount. Writing puts seems a good way to earn some premium and if nothing else, cheaply scale in to a decent stock.
Case in point, Berkshire Hathaway B stock .... although the spreads seem really wide right now. Is there a good way of looking at this? There is a trade between margin use, to lock in premium (and hopefully see through to expiration) and account balance available in case I have to exercise (on expiration date).... expiration week or day seems to be a good time to put on more aggressive positions, since probabilities of a larger adverse move are lower over a few days or day, than longer periods (obviously) ....
Thoughts...??
I guess it depends on your personal risk appetite. E.g., with 24 hours or less to expiration, while most options should really be worth < 0.01 but trade at 0.01 or more, then indeed, the premiums are quite elevated. Mispricing occur more frequently close to expiration.
Is it usually the case that the premiums (presumably corresponding to the midpoint of bid and ask?) are dwarfed by the bid-ask spread? Come to think of it, I assume at such levels negative premiums (making the option less valuable than its intrinsic value) are encountered? Are premiums that small really meaningful in terms of prospects for profit, in the presence of bid-ask spread? Also, at expiration, is it usually the market maker that one trades with, or mostly other traders trying to close their positions, and traders that are fishing for panicky traders trying to close their position to avoid assignment etc?
FWIW, in my mkt, apart from a few blatant fat-fingers, operational snafus or newbie mkt-maker errors, I have never seen what, in my view, would constitute a serious systematic mispricing of options arnd expiry. So no "fatted up premiums", no "collapse of IV" and, definitely, no free money.
The one unknown in all this is the size you're doing. I guess it's possible that, if you're sufficiently small, various risks that make what looks like "free money" actually not free, sorta go away. It's still not 100% clear to me that it's the case.
The one unknown in all this is the size you're doing. I guess it's possible that, if you're sufficiently small, various risks that make what looks like "free money" actually not free, sorta go away. It's still not 100% clear to me that it's the case.