Is it true that the biggest decline it the option price (particularly calls) occurs over the first weekend after expiration.
I don't think I've heard that before -- do you have any hint as to what the mechanism, psychological or otherwise, might be?
Someone wrote that somewhere. If its true, I'm wondering if I should be writing my calls for Sept before this coming weekend.
I've fallen into a pattern of writing my calls about 4 to 6 weeks out most of the time. I like to be far enough out from expiry to still have some decent time premium left -- a wasting asset for the buyer.
Do you all write your calls like clockwork (when?) or are you waiting for certain stock price movements?
My rhythm is coarse: I'm in the market to sell calls each month after I close out the previous cycle -- usually sometime from the 7-21 of the month -- you know, watching and waiting for a modest run-up to fatten the premiums. I generally feel comfortable doing this (although NOT all the time...) because I'm only writing calls on stocks I've been following for years. So, as folks here have already suggested, I hope I have a pretty good sense of the general trading range a stock is in and as long as it does not wander away from that area too much then the CC scheme works out just fine as the time premium wastes away.
The daily knocking around of the prices, news, and market psychology on this thread helps me a lot, in fact, this is the very raison d'existance of the cc4d thread.
Most of my cc writing is done on underlying securities I plan to hold for the long run. Sometimes I execute a buy-write program. Buy-write, to my mind, is a lot simpler, predictable, and low-stress because it is largely an initiate it and fugetta-bout-it thing.
Oh yes, and all my trading is in a taxable account. <:o(
--dfl |
