Time Decay & Ratio Spreads

[savage]

I'm looking to put on some ratio spreads for the first time and was hoping to get some feedback on when the best time of the month would be to take advantage of the quickest time decay while still being able to sell some premium.

Thanks,

Savage

 

[metooxx]

Not tomorrow ...

 

[inandlong]

I love this place....

 

[savage]

Metoo, Thanks!

How about monday?

 

[hardrock375]

Originally posted by metooxx
Not tomorrow ...

Ladies and Gentlemen, I give you "The Pete Rose of Elite Trader".

Classic singles hitter, always comes through in a pinch.

 

[metooxx]

Originally posted by savage
Metoo, Thanks!

How about monday?

OK, here we go again; it depends.

You have to look @ each proposed spread and determine the characteristics of that situation.

There is no real pat answer; options are not stocks or futures that can be defined by a simple set of rules. For every textbook example you can find, I can find you one that isn't supposed to do that ...

Is that a homerun?

 

[hardrock375]

Originally posted by metooxx


OK, here we go again; it depends.

You have to look @ each proposed spread and determine the characteristics of that situation.

There is no real pat answer; options are not stocks or futures that can be defined by a simple set of rules. For every textbook example you can find, I can find you one that isn't supposed to do that ...

Is that a homerun?

Yes, Home Run. In all seriousness, it does depend on the specifics of the trade. Sometimes, people ask questions RE: options, looking for a simple answer. However, oftentimes in reality, as you know, there is not a simple (totally correct) answer. If you give a simple answer, they get angry because you did not provide justification. If you explain it fully, either they do not understand, or, just say "thanks".

 

[Breakout]

Originally posted by savage
I'm looking to put on some ratio spreads for the first time and was hoping to get some feedback on when the best time of the month would be to take advantage of the quickest time decay while still being able to sell some premium.

Thanks,

Savage

Hi savage...I'm not an expert, but it's been my under-
standing that the best time to sell an option is the beginning
of the last 30 days of an options life.

For example, this is expiration day for Sept options. If I
wanted to sell Oct options, I would sell them about 30 mins
before todays market close. That way, the deterioration of the
options time value begins this weekend.

Hope this helps

 

[savage]

My question is rather simple. If you look at the time decay curve during the last month of an options life, at what point(broadly) on the curve is the most efficient point considering time decay & option value. Think "Efficient Frontier".

 

[metooxx]

Originally posted by Breakout


Hi savage...I'm not an expert, but it's been my under-
standing that the best time to sell an option is the beginning
of the last 30 days of an options life.

For example, this is expiration day for Sept options. If I
wanted to sell Oct options, I would sell them about 30 mins
before todays market close. That way, the deterioration of the
options time value begins this weekend.

Hope this helps

Not that simple ...