October 30, 2008
How many days at least before expiration would you buy a call or put of a stock that’s as volatile as AIG now?
Ivan K. asked:
I just want to know if there are still plenty of people who try to get in even though there are only maybe 4-5 days to expiry.
I just want to know if there are still plenty of people who try to get in even though there are only maybe 4-5 days to expiry.
Would you exercise 1 Oct 3 call (AIG) and it’s 1 dollar on expiration date or sell to close the call? (assuming AIG is trading at 3.86)
Thanks.
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Comments on How many days at least before expiration would you buy a call or put of a stock that’s as volatile as AIG now? »
Some do, trying to get a quick buck. It’s too speculative for me though.
I generally try to exit an option position before expiration week, particularly in a volatile market. Too much risk of wide swings against your position. I enter 5 wks - 3 mnths before expiration.
I’d personally sell to close. Transaction costs will usually be less and you still can recapture a little time value.
Also I try to be a net seller of options particularly in a volatile market when premiums can be sold so high. Not naked, but hedged. There’s several strategies that can be employed using “credit spreads”. Or even safer “covered calls”.