Quote from optioncoach:
Honestly there is no correct way since wild price swings would offset theta with respect to entry. There are many ways you can time your entry but it will be quite difficult to devise a specific fixed rule without taking the SPX movement into account.
There is that one downside about waiting until after expiration because the time starts getting closer and theta starts making it harder to go as far OTM as you would have originally liked. SOme months it may be fine because you get some nice price swings after expiration which makes entry easy, other times you mught have to wait a week and theta shrinks the premiums even more.
One tip that I try and do occasionally when I can is to have two sets of money for spreads so they overlap. So while I am sitting on a MAR position, I still have cash margin set aside to roll into APRIL posiitons when they are in the 35 to 45 day to expiration zone. This way you enter the next month's position at the time you think is best as opposed to rushing in after expiration. Case in point is that while my FEB posiiton was in place I entered my MAR position. When FEB shrunk considerably, I took it off for a dime to grab that profit and free up the margin.
The best result is of course the market moves tremendously and you close out your current month position with time left to expiration and thus have plenty of time to enter into a position for the following month.
I think you need to be flexible. For example, right now, my plan is to simply ride everyting to MAR expiration and will not look into APR unless I have a great opportunity to close out the MAR position. THis might mean I do not have a great entry in APRIL so I might only take a small one and save some gunpoweder for MAY. It would be nice to load up each and every month but it just is not possible and overlap or holding to expiration may mean you skip a month while waiting for a better oportunity.
If you only have positions in 10 out of the 12 months, you still can make good money. So instead of forcing yourself into a position just to be into a position for that month's expiration, let the opportunities come to you. Sometimes you have to sacrifice a little. For example, I closed my JAN position the first week in Jan so that I would be free for the coming FEB expiration. That meant not taking the full profit on JAN in order to be ready for FEB. So I took maybe half the profit on the table so that I would not be handcuffed for FEB. I then overlapped FEB and MAR. Taking this approach will help you get in as many months as possible without chasing or forcing it.
. Of course a godo JA pic keeps the ratings high but we do not want to offend Donna