Make Money when Options Expire

create profit when option expireSmart traders make money when Options Expire. They earn money by selling time premium or time decay. Time decay is the enemy of the option buyer but is the BEST FRIEND of the option seller, especially when the options expire (worthless).

The concept of selling options and waiting for the price to decay is a slow process. With selling option premium You will not make a fortune overnight. But as sure as the sun sets at night and rises in the morning it will provide the trader with fantastic returns and wealth. And many times you don’t have to be right whether the stock is moving or in which direction it goes.

 

When Options Expire

I  will show you how to make a decent living. Selling Option Premium so that Options have Time Decay and Time Decay is the best friend of an option seller and the enemy of the option buyer. You only have to wait that the options expire to make money.

Often heard is that 90% of the options expire worthless. Options near the stock price will be sold very well and options far out of the money will only be be sold occasionally. It is not very profitable to sell options far out the money. And selling a lot options far out of the money is adding to much risks for a few cents. We like to sell option premium which have enough premium but have less risk.

What price do you choose for selling out of the money options. For selecting the right kind of options we are looking to stock that moves much. It is save to select options which are 1 standard deviation away from the mean. These options have a chance of expiring 84% of the time worthless. If you the want to increase the premium you can choose to sell a put and a call together at 1 Standard Deviation away. If you like to reduce risk you may sell a call spread or put spread in stead of a naked call and a naked put.

 

Sell Options with much Premium

Should you sell a lot of options to make some bug? No, of course not. You want to sell a few options with a big fat premium. Therefore we are looking options that are volatile. Volatile options are expensive, the have more premium. So when you sell options with big premium you don’t have to take on much risk.

Options Expire

Sell options with a high Implied volatility, that is above 50. When the Volatility drops you can make at least 25% profit. You Manage positions by closing out the trade. Therefore your win rate will be high and your portfolio is growing rapidly

If you like this post about making money when options expire you would also like other posts like How to make money with trading.

 

 

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