Better Safe than Sorry 

Going into the notoriously volatile period before option expiration with short option positions isn’t always wise.  Even options that seem to be so far out of the money that they couldn’t possibly end up hurting you should be offset.  For example, in this case the odds of the S&P rallying 25 points in week seem to be slim, however, you should never underestimate the market.  In attempt to squeeze another $250 out of an already extremely successful trade you could end up in the middle of a small disaster.  Remember, being greedy goes against the premise of this strategy and could easily turn a winning trade into a loser.

As with any trading strategy or method, losing trades are unavoidable.  Thus, it is important to point out that there is substantial risk involved.  Many option sellers fall victim to greed.  Failure to cut losses short can put traders at the mercy of the market. likewise failure to offset profitable options with little value left in them is a recipe for disaster in the long run.  Although the odds of a profitable trade are in the favor of the option seller relative to the buyer, instinct and the ability to make proper adjustments are crucial to making S.O.S.’s profitable.

**There is substantial loss in trading options and futures.

 

    

Futures and Options Trading Booksby Carley Garner

What People are Saying about Our Commodity Trading Books

Choosing a Futures Broker and Brokerage Service

Full-Service or Online Trading?

The decision to trade online or through a full-service commodity broker will undoubtedly make a large impact on your bottom line.

Learn More

A Fair Commission Rate vs. Low Commission

To look at commission rates objectively, we must understand the background of the futures industry and how brokerages accept risk for fees.

Learn More

Choosing a Commodity Brokerage Firm

Deciding on a commodity brokerage firm is a significant decision and shouldn’t be taken lightly. Not all traders and brokers are compatible.

Learn More

Choosing a Futures and Options Broker

Most traders in search of a futures broker are concerned primarily with trading platforms, commission, and quality guidance.

Learn More

The Truth about Futures Commission

The goal of futures trading should be to MAKE money, not SAVE it! Discount commodity brokers cut corners that cost their clients time & money.

Learn More

Commodities via Futures or ETFs?

A key difference to trading commodity futures over ETFs is leverage, but there is more to discuss, such as taxes, market hours, and efficiency.

Learn More