As a regular options premium seller, I love the three day holiday.
We have one coming up this weekend for Memorial Day, and even though volatility is low the clock is my friend. You see, time decay will work in my favor as a seller; I will receive an extra day of no trading.
Now, you may be thinking prices are already reflecting this, and by the option pricing models the answer is yes. Yet, as markets trend towards a long weekend we have consistently found volatility to also trend. It’s not 100% perfect but the odds favor a win to a premium seller.
The VIX Right Now
With VIX sitting in the low teens is there really enough ‘juice’ in the options to make it worthwhile? In fact, that is a great question, and the answer is – ‘it depends’. By and large there is opportunity to sell premium on both sides of the trade — call spreads and put spreads are my preferred choice, and I’ll do these with weekly options.
In this case, the strikes expiring May 29 or Jun 5, as they will decay the most following the holiday. The chart/technicals always are my first read into my trade ideas, and only if a chart setup is there will I consider a trade.
Bottom Line
Further, I am not necessarily looking for a stock breaking out – remember, as a premium seller I can still win if the stock goes sideways, as long as my short strike is safe by expiration.
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To learn more about Bob Lang and Explosive Options, go here.
