'Tis the season for December options to expire. The last day of trading is Dec. 20, which means I exit on Friday, Dec. 13, those positions that can be exited and allow the rest to expire for maximum profit.
An exit isn't a permanent end. I'm only out until I can roll the position forward into January (for credit spreads) or a later month (for debit spreads). The roll happens when there's a fresh, confirmed break beyond the 20-day current price channel.
If there is a cross beyond the 10-day price channel opposite the direction of the trade, and the Elliott wave count of the chart confirms the reversal, then I stop looking for a roll and calculate my wins and losses.
Also, I'll exit an out-of-the-money credit trade rather than waiting for expiration if the price is 10 cents or below. Why take the risk of a sudden move for $10 a contract? Often, no exit is possible because there's not a market for contracts so far out of the market.
References
My trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.
Disclaimer
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
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