There was a paper floating around a couple of years ago about selling the near-month straddle or near-the-money (1st or 2nd) strangle on TLT each month, and letting it go to expiration (presumably you would take it off a day or two before). There was a positive expected return for this strategy over time--I think it was about 20% annually. The paper explored several strategies for supplementing this method with hedging, profit taking, etc., and I think concluded that it was best to simply put the trade on and do nothing further. The only 'adjustment' they did find useful was to try to enter the trades during volatility spikes.
It is not too bad an idea for a small portion of your capital, but I would not be willing to do it with anything too volatile (this is why they chose quiet little TLT-which clearly would have bitten you badly if you had done this over the last few months). Definitely this would be a bad idea with individual stocks, especially in earnings season.
While a set and forget strategy may be do-able, it's hard to see how it could be optimal. Anything with shorts gets crazy the last few weeks, so that near expiration, you find yourself risking a large amount in order to pocket a very small amount. Possibly a better twist would be 2nd month options and trying to get out around 2-4 weeks early. A longer time frame gives you a chance to wait for a favorable volatility condition and also allows you time to put on the same type of trade at different prices of the underlying, thus widening (but also shortening) your profit zone.
