Butch,

It has been my experience that the first Monday after expiration is usually not the best time to sell covered calls, especially if it is a down day in the overall market. Of course, as a seller of covered calls and cash secured puts, I look for any day to do business. Do you have some thoughts you care to share about you personal timing?

Tami

I am happy to explain what little I know from my own experience and since it is a ‘market’ there are variations each and every month.  And gosh Laurie, now that I think about it every month is so different in its personalities.  I just was thinking as Butch made his comments that I have been disappointed in the past as I sold options early only to see the premiums really jump higher in APRs as the time factor diminished. 

Also as I chart my own option contracts from their original sale and through either their buy back or expiration or exercising; I seem to notice that volume and activity on trading the monthly options increases about 2 weeks before closing.  I have seen the similar increased activity on weeklies as Friday’s volume is usually more than Thursday’s and Mondays can be very high depending on the overall mood. 

I guess that I would just say that I really like to ‘feel’ the market on the day that I make trades.  There is nothing I hate worse than to pull up an option chain and see either 1) green increasing numbers on both puts and calls or 2) red decreasing numbers on both the puts and the calls.  To me, it just feels like there isn’t a clear signal and its best to just step away that day.  I like a good strong clear signal on the day of selling calls.  Today is a perfect day to sell AAPL calls, with very high APRs available on almost any trade, especially the weeklies.  By comparison, GOOG today is not at all a clear signal.  Probably going to end as a doji (and Mary Ann hates the doji). 

Butch said, “I don't have any personal timing techniques that I use when investing in the market, I'm just not smart enough to understand market timing.” And my only comment here is that options trading does involve some timing.  The thoughts for me is how much am I getting paid to either sell the insurance on my shares or selling the insurance on my cash.  My minimum standard is 20% APR.  10% on my cash (most especially) and 10% on my fundamentally good stock is not enough for me. Other than that difference with Butch, I agree with all his other 7 disciplines.

I had hoped that there was something that he had noticed specially on first Monday after expirations.

Hi Tami,

I can understand why you wouldn't want to sell covered calls on a down market day, but I am curious what issues you've seen on the Monday after expiration.

Can you expand a bit more on your comment to help the rest of us learn from your experience?

Thanks!

Laurie Frederiksen
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I am happy to explain what little I know from my own experience and since it is a 'market' there are variations each and every month. And gosh Laurie, now that I think about it every month is so different in its personalities. I just was thinking as Butch made his comments that I have been disappointed in the past as I sold options early only to see the premiums really jump higher in APRs as the time factor diminished.

Also as I chart my own option contracts from their original sale and through either their buy back or expiration or exercising; I seem to notice that volume and activity on trading the monthly options increases about 2 weeks before closing. I have seen the similar increased activity on weeklies as Friday's volume is usually more than Thursday's and Mondays can be very high depending on the overall mood.

I guess that I would just say that I really like to 'feel' the market on the day that I make trades. There is nothing I hate worse than to pull up an option chain and see either 1) green increasing numbers on both puts and calls or 2) red decreasing numbers on both the puts and the calls. To me, it just feels like there isn't a clear signal and its best to just step away that day. I like a good strong clear signal on the day of selling calls. Today is a perfect day to sell AAPL calls, with very high APRs available on almost any trade, especially the weeklies. By comparison, GOOG today is not at all a clear signal. Probably going to end as a doji (and Mary Ann hates the doji).

Butch said, "I don't have any personal timing techniques that I use when investing in the market, I'm just not smart enough to understand market timing." And my only comment here is that options trading does involve some timing. The thoughts for me is how much am I getting paid to either sell the insurance on my shares or selling the insurance on my cash. My minimum standard is 20% APR. 10% on my cash (most especially) and 10% on my fundamentally good stock is not enough for me. Other than that difference with Butch, I agree with all his other 7 disciplines.

I had hoped that there was something that he had noticed specially on first Monday after expirations.

From: cool_club@bivio.com [mailto:cool_club@bivio.com] On Behalf Of Laurie Frederiksen
Sent: Monday, August 20, 2012 8:42 AM
To: cool_club@bivio.com
Subject: [cool_club] Selling Covered Calls on the Monday after Expiration

Hi Tami,

I can understand why you wouldn't want to sell covered calls on a down market day, but I am curious what issues you've seen on the Monday after expiration.

Can you expand a bit more on your comment to help the rest of us learn from your experience?

Thanks!

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio

On Sun, Aug 19, 2012 at 5:14 PM, Tami DeAngelis <tamideangelis@gmail.com> wrote:

Butch,

It has been my experience that the first Monday after expiration is usually not the best time to sell covered calls, especially if it is a down day in the overall market. Of course, as a seller of covered calls and cash secured puts, I look for any day to do business. Do you have some thoughts you care to share about you personal timing?

Tami

Two ways to verify my statements. 1) the Option chain on AAPL today showed very high increases in calls (green) and very big decreases in puts (red).  I’m sorry I don’t know how to copy a screen shot but I just pulled up the Fidelity page and the numbers for the day are still there.  They will be gone in the morning and only show the last numbers.  2) today’s price chart on AAPL showed a bullish engulfing candle and RSI well above 70%.

As for GOOG 1) the Option chain showed red decreasing numbers on both the put and call side (ok just a little green on the put side just out of the money and not nearly as much volume on that) 2) GOOG chart today is clearly a doji.  Just meaning there wasn’t a clear bullish or bearish signal.  Doing the math homework on the premiums, the APRs for GOOG were nowhere near as rich as those for AAPL.

My signals are simple:  APRs higher than 20% and price chart signals leaning either clearly up or clearly down.  I try to keep it simple.

I am happy to explain what little I know from my own experience and since it is a 'market' there are variations each and every month. And gosh Laurie, now that I think about it every month is so different in its personalities. I just was thinking as Butch made his comments that I have been disappointed in the past as I sold options early only to see the premiums really jump higher in APRs as the time factor diminished.

Also as I chart my own option contracts from their original sale and through either their buy back or expiration or exercising; I seem to notice that volume and activity on trading the monthly options increases about 2 weeks before closing. I have seen the similar increased activity on weeklies as Friday's volume is usually more than Thursday's and Mondays can be very high depending on the overall mood.

I guess that I would just say that I really like to 'feel' the market on the day that I make trades. There is nothing I hate worse than to pull up an option chain and see either 1) green increasing numbers on both puts and calls or 2) red decreasing numbers on both the puts and the calls. To me, it just feels like there isn't a clear signal and its best to just step away that day. I like a good strong clear signal on the day of selling calls. Today is a perfect day to sell AAPL calls, with very high APRs available on almost any trade, especially the weeklies. By comparison, GOOG today is not at all a clear signal. Probably going to end as a doji (and Mary Ann hates the doji).

Butch said, "I don't have any personal timing techniques that I use when investing in the market, I'm just not smart enough to understand market timing." And my only comment here is that options trading does involve some timing. The thoughts for me is how much am I getting paid to either sell the insurance on my shares or selling the insurance on my cash. My minimum standard is 20% APR. 10% on my cash (most especially) and 10% on my fundamentally good stock is not enough for me. Other than that difference with Butch, I agree with all his other 7 disciplines.

I had hoped that there was something that he had noticed specially on first Monday after expirations.