Friday, June 29, 2012

6/29 Options Action web extra - short dated short calls $FB

excellent web extra tonight by scott nations talking about why you should not sell longer dated short options.. echoing alot of things ive been saying on twitter and this blog for months now. here is the video web extra . scott makes a recommendation about what to do with a viewer Facebook SEP covered call

 "shorter dated options erode much more quickly than longer dated ones"

thats the key i keep mentioning, too many variables on almost a weekly basis now.. EU headline news, earnings, opex's, politics.. for you to sell a covered call for Sep, Oct or longer... too many trade possibilities between now and then. Thats why for my diagonal trades im always selling the front month short calls.. get that max time decay.. the other thing ive noticed is that when i see someone sell a short call months and months away.. is that after a few days / weeks they start to get antsy and want to do something with it, as in trade around it somehow..either buy it back and do something else, or worse they somehow thing selling short calls as a strategy does not work, or blame someone for why they sold that longer dated short works fine if you actually follow it. see my diagonal paper trades here as an example Paper trade model

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