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Newbie here, with a couple of questions. First, can someone point out how to tell what time options expire? Right now I'm trading SPY, and I think they expire at market close but I'm having trouble getting a definitive answer.
Second, what time in the day do y'all generally make your trades? Specifically I'm thinking of the situation on Fridays, if the option expires at market close, how do you also sell a Monday option without having two positions open at once?
Thanks for any feedback. The site and forums are great and I appreciate the great explanations.
Most of the time the SPX options expire at the market close.
The only exception is the one contract that stops trading on the Thursday before the 3rd Friday of the month. That one uses the Friday morning S&P 500 open.
I described my trading strategy for rolling the contracts in Part 4 of the put series. It depends on the Delta of the puts that expire that day.
Note with SPY although options expire at close you can be exercised up to 6pm and even if you’re slightly OTM. That’s an advantage of XSP over SPY, along with tax treatment.
@nobatmanjokes Yea, this is the source of the trouble I'm having. I'm not yet ready to step up to SPX until I've practiced this a bit more, but the timing on SPY is tough. Do you ever roll positions? I was thinking rolling a position right before market close to the next expiry (For example, roll Wednesday expiring options right before market close to Friday), but do you find that costs too much?
@jblack6572 I’m suggesting XSP which has the same size as SPY but acts like SPX. When you’re ready to move up from XSP you can go to the ES futures before graduating to SPX.
You certainly can roll the positions, or if your leverage is somewhere around 3 you’ll have enough buying power to set new strikes for Friday without buying to close the Wednesday strikes. Saves you dollar or so which matters especially with the smaller contracts.
@nobatmanjokes Thanks, great info. While we're on the subject, I'm curious how it is you're calculating leverage for selling positions, as it seems there are a few ways I've seen this done. When you say 3x leverage, do you mean max risk (i.e. underlying goes to zero) divided by bankroll/account total?
Yep! That’s the definition ERN outlines in one of the posts too.
As ERN says in Part 4 of his series, the timing is truly an art. Here are a couple of rules I've created for myself as far as when to get into a trade:
1. Don't trade the first 30 minutes of the day
2. After 30 min, if the market is trending up or sideways, consider opening a trade
3. If the market is trending downwards, wait until you see a clear reversal
So right now (7/14/21) the market opened up but has been trending downwards since open. I'll wait until I see a clear reversal before I open up a trade.
@mpaziran I heard about that rule about the first 30 minutes. Could work either way. I've experienced tumultuous days where the first 30 minutes looked scary and you could have sold puts at a much higher premium than waiting.
So, it's good to see that others have their little rule book. I will stock with my Delta-focused approach! 🙂