Selling Theta: 5 Option Write Ideas for a Closed Market
Today is Wednesday November 25, 2009 and I am in a selling mood, not because I am extremely bearish but because I see a potential profit play. I am looking to sell covered calls on some of my holdings. If you're thinking about selling covered calls like me, today may be the day to do it! This won't make anyone rich but it's simple, safe, and may give a couple extra dollars to spend over the holiday's.
In this article I will outline five covered call ideas for Wednesday's trade. The reason I plan on selling covered calls today, is because I am taking advantage of time decay. The amount an option contract decays each day (holding everything else constant) is known as Theta, and is your friend when you're the seller. With the market being open three and a half hours (market closes at 1 PM Friday) over the next four days, option contracts should decay. Premiums should be higher going into the close Wednesday than they will be Friday morning, likewise premiums should be less Monday morning than they were at close Friday. I don't expect too much action Friday, so I am choosing to write my shares out Wednesday.
Since I plan on writing covered calls on my positions anyway, I believe it may be beneficial to get short theta Wednesday versus next week. With some of my positions such as Apple and Google, I may look to purchase back the call if profitable when trade resumes Monday, and wait to write it out again on strength in the underlying. It is very important to take into account brokerage commissions as the margins may be very thin. It is also important to note the strike prices I have chosen are prices I am willing to sell my stock at in case a significant move higher occurs in the market.
- 30 High Yielding Option Write Ideas for November's Option Expiration Friday
- 21 Breakout Stocks to Watch & Using Apple LEAP Options to Generate Income
- 21 Breakout Stocks to Watch & Using Apple LEAP Options to Generate Income
- 21 Breakout Stocks to Watch, And How to Generate Income with Apple LEAP Options
- Option Spreads With Greater than 40% Chance of Doubling Your Investment
- IWO Into the Close, October 10th, Earnings Plays for GS AAPL and GOOG
- FINZ Futures EP.4: S&P E-mini Futures (ES) vs. Nasdaq E-mini Futures (NQ) & Hedging Concepts
- Intermediate Term Technical Analysis on Gold (GLD)
- Market Reality Check EP.1: GDP Report, Bond ETFs, Utilities, and the FED
- FINZ Futures EP.3: Dow Jones Industrials 7 Day Run, Nasdaq 100 Historic 10 Day Run, Where To Now?
