Replies to post #114949 on Option Millionaires

[leemalone2k3]

Absolutely. There have been times that I made money on the short side of the trade held the long position and made money on it also. If the long option expires worthless you wont have to pay comms to close it obviously. Another added bonus by holding the long side into expiration even if worthless is that news could come out after hours the stock could rocket up and the call could close deep ITM on Saturday when options close out. If so you will be exercised and then sell the stock on Monday or even Friday AH for more profits.

The point of that trade was to capture the premium on the short side so that you pay off the long side if the trade goes against you, which it did for Gotusucka.

Also you can continually trade the short side multiple times against your long position until expiration.

One very important point is toALWAYS CLOSE OUT YOUR SHORT POSITION ON EXPIRATION EVEN IF THEY ARE WORTHLESS!!!!!!.
Consider this scenerio: You have a vertical spread and the short side is worthless or worth .05 or less. That means you have reached almost all of the max gain the spread has to offer you. You could let them expire worthless and do nothing, but what if news comes out AH and the stock moves hard against your spread. You have just turned a max gain spread into a max loss spread, and there is nothing you can do about it. TOS lets you close out short options that are worth .05 or less for no commissions, encouraging traders to take all that risk off the table.

Some other thing about verticals. You should not go out more than 40 days for verticals, otherwise time decay is too low. If you have a vertical trade with a couple of weeks leftuntil expiry, and have achieved 85% of the max gain, it's usually a good idea just to close the spread out. There is no sense riking the gain you have just to get the remaining few percent of that gain with so much time left. At least close out the short side, then if opportunity arises sell against your longs again. With weekly options on volatile stocks you cn buy front month or out longer. and trade weeklies against them .