August 17, 2017

Options Premium Expires as January Expiration Ends

Friday is the end to another successful expiration cycle. Unless the major market indices  rally 2% tomorrow our bear call spreads should be in good shape. Typically, I would’ve taken them off, locked in a profit and sold more options premium, but the positions were never in jeopardy of taking a loss. As a result, I will allow them to expire worthless reaping the max profit.

Quick Note: Remember, paying commissions should NEVER be a reason to hold on to a trade, especially if there is little to no premium left in the trade. Why risk making an additional $0.05 when you could potentially lose $1.95, it doesn’t make sense. For this reason brokers like Thinkorswim offer there clients free commissions for anything less than  a $0.05. It makes sense and it goes a long way in showing just how savvy and knowledgeable they are as an options broker.

We also had a very nice directional trade in XOP this cycle. I rarely buy options, but if our shortest-term indicator is in an extreme state I will place a short-term directional trade using a aggressive strategy. Again, this type of trade is a rarity, but oftentimes, it’s profitable…and that’s all that matters.

As long as we continue to take manage our winners, take profits when they arise (not trying to suck out each last penny of premium from each trade) and use high probability strategies we will continue to succeed.

There are no real extremes to report tonight so I’m not going to bother posting the High-Probability, Mean-Reversion Indicator tonight.

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.

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