How far ahead do you buy weekly options?

How far ahead do you buy weekly options?

Posted in the Business News Forum

Since: Jun 13

India

#1 Jul 31, 2013
The most recent one for me was a NEM Covered Call using strike 34 options when the stock was just under $34. I think that was about 7 trading days prior to expiration which I find is a good time because the very last week the premiums aren't great but about 7-10 trading days prior the premiums are fairly good, the decay rate is very large, and the holding period is short.
The return was about 1.9% which may not sound amazing but that's about a 10 day return of 1.9% so it's hard to go too far wrong. As always it's a matter of personal preference, if you go out slightly longer you'll get a better premium but your holding period will be longer which means you've got less visibility into what the market will be doing weeks down the line as opposed to days. I find that 7-10 day period offers a nice balance between holding period and return.
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