One of the key elements of the BCI methodology is mastering position management exit strategies where we buy back options. This information is detailed in my books and DVDs. Once we buy back an option it will not be exercised but neither will it expire worthless. The same holds true for a buyer of an option who then sells that option. Those options, too, will not be exercised nor will they expire worthless. So to be both informed and accurate, and according to the Chicago Board Options Exchange CBOE here are the more accurate statistics:.

Now for conservative investors, is it better to be the seller of a decaying asset theta or time value erosion eats away at option premium starting the moment we sell the option rather than the buyer?

In my view, yes it is but certainly money can be made on the other side if option-buying is mastered and if personal risk-tolerance permits. The reason we have an opportunity to generate much higher than a risk-free return treasures for example is because we are getting paid to undertake risk…low-risk but risk nonetheless:.

When evaluating which investment strategies are most appropriate for our families, we do our due-diligence and evaluate all pros and cons. It is important that information is both accurate and properly understood so it can be meaningfully evaluated. Recently quoted in an article written by the Chief Editor of the American Association of Individual Investors.

US and Global markets were negatively impacted by more bad news from China, Japan and Russia. Investors sold off stocks and moved into bonds and gold. In addition to this broad and steep sell-off in stocks were further drops in prices for commodities, including oil and copper.

Not available on vacation. With the extreme sell-off this week, the VIX has moved up to 28, the highest level since October, This creates two issues. First, option premiums will go higher and second is a psychological component. Panic -selling can cause a further decline until the market stabilizes.

Some investors, on the other hand, may see this as a buying opportunity. I plan to wait a few days into next week before setting up my game plan for the September contracts. We have seen this before and the market usually recovers in the near term. Posted on August 22, by Alan Ellman in Investment Basics , Option Trading Basics , Stock Option Strategies. To send us an email, contact us here.

Subscribe to our e-mail newsletter or RSS feed to receive updates. Contact us by phone at Additionally you can also find us on any of the social networks below:. You can view them at The Blue Collar YouTube Channel.

For your convenience, the link to the BCI YouTube Channel is:. I have refined my trading To Weekly in the money call option selling on a select number of stocks and am managing with the additional sale of calls or puts In that weekly time period to make a profit I always position myself too be assigned at the close.

I give myself a deserved rest on the weekend And start fresh on Monday and decide on the weeks trade. As you go through my material you will note that I consistently repeat that there are many ways to make money in the stock and option markets. There are pros and cons with Weeklys and as long as we master those nuances I have no issue with the strategy you present and thank you for sharing this approach with our BCI community.

Great Book full of insight and easy reading Should be a must reading for any serious trader or investor. Every Friday expiration date is a challenge, but its what makes a good options trader I always position myself for assignment It is still amazing the amount of time value that remains on the last trading day. Getting Called away is why I sell options and the natural outcome of this kind of trading Getting exercised is great Bring it on So I can get some more Exercise on the Weekend.

Love repositioning On expiration Friday for. Max Profits Which always includes addition sale of naked puts or calls Expiration day is nothing to fear. What percentage of your stock positions are sold before expiration? I have some dividend stocks that I would prefer not to sell. It would be even less if I wanted to avoid early assignment because of ex-dividend dates by selling the option after the ex-date or selling a 2-month option with an expiration the month after the ex-date.

You are doing quite well under these unusual circumstances. The glass is half full. How are you weathering this market so far? Are any of your puts deep-in-the-money? How do you manage that when it happens?

Barring an extreme gap-down, this will usually keep us out of trouble. One asset class — at least I think of it as one — not to be overlooked is volatility. You should understand how they work and the difference between backwardation and contango before you dabble.

Please re-read that sentence several times: But many in this community have been around the block. So my suggestion is SVXY. I started a position Friday and added today.

This is one you layer into while the market implodes then wait for the VIX to mean revert back to below 20 which it always does. They are high because SVXY is a live snake and if you are not an experienced snake handler please avoid it! Just an idea for a long at a time when fear is high. Even if you do not catch the bottom, as few do, adding SVXY on dips can be a more positive way to view this correction than panic selling your stocks.

Betting on VIX to come down from spikes — even if it takes a while — has been a consistent winner. And SVXY does not expire.

Options Expiration, Assignment, and Exercise

Pre-market futures on Tuesday are showing the potential for a rebound day. This would be a welcome relief from the recent selloff but the question becomes, is it sustainable?

The talking heads will disagree because no one knows for sure. The CEO of Apple Computer Tim Cook came out with a rare mid-earnings report comment stating that the company is performing quite well in China for July and August as China remains the prime culprit for recent declines.

In my view, we are in a phase of panic-selling and this may lead to the Fed to putting off an interest rate hike until December or even next year. Volatility is high and the normal rules that define the market are not in play until have more stabilization than a possible 1-day rebound. I am currently holding on to the stocks in my portfolio but not taking on any new covered call positions until we have more color and definition as to market direction.

This is not as our economy is still doing well. I view it more of a short-term aberration. After the debacle of , many retail investors sold low and never re-entered the market due to fear of a recurrence of another out-of-control selloff. Since then the market has tripled. We must all stay within the framework of our personal risk-tolerance.

However, the lesson from is that short-term pain does not justify long-term panic. Jim Cramer had similar sentiments yesterday when he said that it is a stock market gone wild but not an economy gone wild.

The latest ETF Report has been published on your member site. Aside from the 4 Inverse ETFs, only 4 other eligible ETFs are in positive territory over the past 3 months. At this time, I am keeping all securities currently in my portfolio but not adding any new ones or writing any calls on them. Once a bottom is established and the bull market continues as we re-focus on our still-healthy economy my opinion also it will be business as usual in my stock and option portfolios.

Only soft-cover versions are available at this time. Hard-cover and kindle versions will be available in the fall. Shipping will begin the second week of September based on when the order was placed. Here is the link to the information page:. Could you please clarify this for me? The deal will be completed first quarter of Does this make sense? Mail will not be published Required. You can use these tags: Notify me of followup comments via e-mail. You can also subscribe without commenting.

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Percentage Of Options Expiring Worthless: So to be both informed and accurate, and according to the Chicago Board Options Exchange CBOE here are the more accurate statistics: Creating an Ask Alan video in two minutes http: With thanks to Darius and my amazing team.

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Misconception: Almost All Options Expire Worthless

Louis, Missouri September 15, 6: New US home construction and resales both rose to eight-year highs in July Residential construction starts increased 0. Economists had expected a slight increase to Though the firming labor market raises the likelihood of a rate hike, persistent low inflation and global economic deterioration could lead the Fed to delay the increase Initial jobless claims rose 4, to , for the week ended 15 August The four-week average has been below , for 21 straight weeks Continuing claims dipped 24, to 2.

Market in correction GMI: Not available on vacation BCI: Wishing you a better week ahead, Alan alan thebluecollarinvestor.

Misconception: Almost All Options Expire Worthless

About Alan Ellman Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing.

Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog..

He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies. Connect With Us To send us an email, contact us here. Additionally you can also find us on any of the social networks below: A Key Component to Successful Long-Term Investing. For your convenience, the link to the BCI YouTube Channel is: Hanze, As you go through my material you will note that I consistently repeat that there are many ways to make money in the stock and option markets.

Max Profits Which always includes addition sale of naked puts or calls Expiration day is nothing to fear Hanze. Alan, What percentage of your stock positions are sold before expiration? Alan, How are you weathering this market so far?

Percentage of Options Expiring Worthless: Debunking a Myth - ydigatocop.web.fc2.com

Friends, As John Lennon sang: Alan, Jim Cramer had similar sentiments yesterday when he said that it is a stock market gone wild but not an economy gone wild.

Premium members, The latest ETF Report has been published on your member site. Here is the link to the information page: Wishing all our members much success, Alan. Subscribe Here - Have the latest blog articles sent to your inbox. Subscribe to this articles Comments via RSS Feed.

Learn how to take a Screenshot so you can add it to your comment. Leave a Reply Click here to cancel reply. Dealing with Volatile and Bearish Markets: A Place In Our Covered Call Writing Portfolio? July 15, 8: Washington DC Chapter AAII- Summer Workshop.

The New Stock Market- Algorithmic and High Speed Trading January 15, Options That Expire Weekly and Conventional Expiration Cycles September 26, Short Selling: Positives and Negatives January 30, The CBOEs Volatility Index VIX September 11, Penny Pilot Program October 29, MarioG Here is my status and my experiences after Expirat Roni Thanks Barry, I was trying to enter a covered c Barry B Hi Roni, WCN had a 3 for 2 stock split on June Alan Ellman Randal, Yes. When a strike expires in-the-money Alan Ellman Luis, When I first started with covered call wr.

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