Option Strategy Big Swing Expiration

Dear Options Trading FAQ:

Thanks for your last reply on OEX option expiration week strategies. Do you have any thoughts on the following? Wait until Thursday and put in a buy order for both a call and put of the same strike for a pre-determined price. If filled, ignore the market and let it settle on Saturday. If the order is unfilled because the OEX moves to another strike price zone, reset the combination order around that new strike price. The trick is to determine the price of the combination, one which results in the narrowest "loss band" and has a decent chance of being filled.

Thanks,

Option Expiration Fanatic

Dear Fanatical Option Trader:

Sounds interesting. I'd like to see how such an approach works out over time. With the volatility on expiration Thursdays and Fridays, I could see some interesting plays using this system on a trading basis (taking a quick profit on the early swings rather than going all the way to Saturday). The beauty of this system is not having to "forecast" the direction of expiration swings. But keep in mind that many expirations are not "wild" at all. If not, option premium buying strategies such as this one can see a steady erosion of value all the way to zero by Friday's close.

Good luck and trade well! Remember, an educated options trader is the best options trader. Browse these books books on trading options.

Tags: Options Trading, Options Strategy, Options Expiration

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