What's Your Average Hold Time on Stock Option Positions?
- Thread starter birdman
- Start date
I sell 8 wks out, and cover 2 wks out, on average. I need to cut down on commissions. I did about $5K in business on a $60K account this past year. I hit net breakeven since inception (27 Feb) this past week. This includes 3 $5K+ drawdowns from losses.
Quote from birdman:
I appreciate the chance to ask you veterans some questions ... Here's one ...
For Stock Option Positions ... (simple calls & puts)
What's your average hold time for all positions (# of days) ?
Average Hold For Winners?
Average Hold For Losers?
Community is Cool
I usually short stock options for three to eight weeks. Winners are held until expiration. Losers are usually sold within three weeks. I seldom long any contracts. Since the volatility and the price of most stocks have been dropping in the past three years, the average hold-time for my option positions has been increasing. This is no fun.
Five weeks on average. Most of us are doing very well in this environment.
These no specific time to hold options,one thing to watch out for is time decay.If you are a buyer of short term options(less than 2 weeks) your timing must be spot on.Your expected move must occur right away,or time decay will start to eat at your option's value at a great rate of knots.This is because the last 2 weeks sees a dramatic drop in time premium for an at- the -money option.Don't be enticed by cheap options in the final few weeks before expiration they are anything but cheap.
Hope this helps
Hope this helps
Don't get caught up in holding times.The idea behind options is to profit.When one buys an option you are expecting a move of the underlying stock, you have to be right in order to profit.
Eg You might have brought an option with 3 months time value so you are expecting the move in the stock to take some time, but 2 days later that option value has dramatically increased in value for whatever reason what do you do?hold it because you have plenty of time left or are you happy with the profit and sell it.
Here's my point buying front month options are ok if you expect that stock to move in a short time frame if you are wrong get out of the trade before time eats your premium away.
The longer the time frame the more conservative,the shorter the time frame the more aggressive,ask yourself which one of these am I,this will help you decide.
Remember when you buy a stock you have to be right,when you buy an option you have to be right on time.
Eg You might have brought an option with 3 months time value so you are expecting the move in the stock to take some time, but 2 days later that option value has dramatically increased in value for whatever reason what do you do?hold it because you have plenty of time left or are you happy with the profit and sell it.
Here's my point buying front month options are ok if you expect that stock to move in a short time frame if you are wrong get out of the trade before time eats your premium away.
The longer the time frame the more conservative,the shorter the time frame the more aggressive,ask yourself which one of these am I,this will help you decide.
Remember when you buy a stock you have to be right,when you buy an option you have to be right on time.