First of all, picking expiration date of an option involves considering various factors such as your trading strategy, market conditions, and the underlying asset's volatility.
Understand your trading strategy: Determine your objectives, risk tolerance, and the duration of time you intend to hold the position. Different trading strategies equire different expiration dates. For example, day traders may prefer options with shorter expiration dates, while long-term investors may opt for options with longer expiration dates.
Evaluate the underlying asset: Assess the volatility and expected price movement of the underlying asset. Highly volatile assets may require shorter expiration dates to capture price fluctuations, while stable assets may be better suited for longer-term options.
Consider upcoming events or catalysts: Take note of any significant events or announcements that could impact the price of the underlying asset. For example, if a company is scheduled to release its earnings report, it might be wise to avoid options that expire before the announcement, as the stock price could experience significant volatility.
Review historical price patterns: Analyze the historical price movements of the underlying asset to identify any recurring patterns or trends. This information can help you determine the optimal duration for your option contract.
Assess liquidity: Check the liquidity of options contracts with different expiration dates. Options with higher liquidity tend to have tighter bid-ask spreads and better execution prices.
Strike price selection: Once you have determined an expiration date, you also need to select an appropriate strike price. Strike price selection is intertwined with expiration date selection, as they both affect the cost and potential profitability of the option. The strike price should align with your price expectations for the underlying asset.
I hope the above example are able to help to understand more for choosing the expiration date of an option. Remember, options trading involves risks, and selecting the right expiration date is just one aspect of the overall decision-making process. It's important to conduct thorough research and analysis before making any trading decisions.
Here are some examples i choose for Selling Put option and Selling Call option for longer term period to earn the premium.
Modify on 2023-07-05 07:11
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Two of my indicators gave sell signals on AAPL today. When my third indicator confirms, it's light out for QQQ.
New low on inverted yield curve resets the recession, out 15 months. This puts qqq at 500 by next October.
Long rates going to put pressure on stocks specifically QQQ and R2K from here on out. Can make more on a Fed cut by buying long bonds than you can on buying QQQ.
what would be the impact of the nasdaq 100 reweighting on qqq
I see the qqq being worth 99 dollars per share after July 24
Will QQQ go up 1% plus or down 1% plus at the end of the trading day tomorrow?
QQQ closed above the 10d again near the highs of the day.