3 months to 2 months is the closest time period with the least drop in value due to time decay. Protective options should be 2-4 strikes in the money to reduce extrinsic value (and time decay). Ensure bid ask differential is less than 5-10 cents maximum. 12/3/16
Why we do weeklies. Check this out! Look at what you can sell an at the money option with 1 week to go. Look at the one with 4 weeks to go, same strike.! You get 2.3 X's as much money selling the weekly! 12/3/16
The reason to choose 90d and not 29 months is that liquidity is proportional to days to expiration. LIQUIDITY concerns should be the highest priority. 12/3/16
Careful sniper. Yes but caution is required (the red zone is red for a reason: the gamma risk, or directional risk, is high). This will be covered in a future post. People who know what they are doing, like sniper can use this time frame but like anyone not versed... earn the black belt. Dont rush yet into things you don't understand. 12/3/16
Director, I gotta stop reading your posts before I go to bed. You mentioned stable processes, well, not a good thing to sleep on. Woke up this morning thinking of stationarity, then hmmm, seem to remember order 1 and order 2. Oh No! I do not want to wake up out of a nice bed thinking about statistics, especially since I haven't done that stuff in 40 years. 12/3/16
posted this method for 8 straight years at the slope.Good to see someone carrying this forward. ( except in my case--I was one direction. wished I'd done more research on weekly other direction, as insurance.) 3 months to 2 months is the closest time period with the least drop in value due to time decay. Protective options should be 2-4 strikes in the money to reduce extrinsic value (and time decay). Ensure bid ask differential is less than 5-10 cents maximum. 12/3/16
The Director
