Writing options for a living
- Thread starter torontoman
- Start date
what i said really has nothing to do with MO.
it has more to do with not writing stuff for 20 cents on a $65 (or whatever it is) underlying.
the reward is just too small.
and otm puts are precious. you just don't write them for 20cents with 16 days to go if the strike is only $5 (or whatever) away.
there are certainly less stressful ways to make money from options writing.
it has more to do with not writing stuff for 20 cents on a $65 (or whatever it is) underlying.
the reward is just too small.
and otm puts are precious. you just don't write them for 20cents with 16 days to go if the strike is only $5 (or whatever) away.
there are certainly less stressful ways to make money from options writing.
Speaking of OTM options, let me say that every options book should have in big red letters a warning for options buyers that the bid/ask spread for otm options is insane.
When do you ever see a bid for a stock (say Ebay) at $20 and the ask at $40? Never.
But that's what happens with the OTMs. As soon as I buy an OTM for, say, an ask of .10, I am in the red because the bid is .05.
This post is meant for newbies I guess - I consider myself now a semi-newbie
When do you ever see a bid for a stock (say Ebay) at $20 and the ask at $40? Never.
But that's what happens with the OTMs. As soon as I buy an OTM for, say, an ask of .10, I am in the red because the bid is .05.
This post is meant for newbies I guess - I consider myself now a semi-newbie
when entering a short option position, you should sometimes think of entering your trade towards the end of the trading week, so you'll get to experience that lovely weekend decay to cover that initial bid/ask spread. if they're front month options and not too far otm nor itm, what you sold them for before the weekend should usuaully be higher than what they're worth on monday morning unless volatility has been cranked up.
Nah, many options get discounted for weekend decay as early as Thursday now. Silly strategy. And when they are not, I have noticed recently that the best time to sell them is monday morning. Many options get their premium crushed come Monday around noon. The options market has evolved a little bit since 1973. LOL.
I don't know which options you are looking at, bust most of the ones I watch get discounted Thursday at the close or Monday morning. I guess we'll just have to agree to disagree again.
I have 12 years of hourly vols for the atm combos on the listed indices. The data definitely suggests that the vols are marked-down on Thursday. I have to agree with Mav that Monday morning usually sees the biggest drop in implieds. Too much discrete selling late in the week while the Monday morning stuff tends to drop off a cliff.
apparently at options that you haven't been looking at.
the thing is that i see what you see, but i'm not sure you see what i see. you're making a lot of generalizations and stating them as if they're the law, but i'm telling new guys and describing things in more open possiblities in what are some things to sometimes look for.
do some options depreciate in their values before monday even comes? of course.
do all behave like that? no.
if you're not sure if thursday value is close to thursday value or monday morning value, then just look at the math and determine if the decay has occurred yet. it's not that hard. if it hasn't hit yet, then it's alright to write them the day(s) before the weekend unless you expect some wild movement. i see nothing wrong in telling guys to capture weekend decay if it's there.
you're stating like it's never there anymore. i just disagree.