Selling options on the day that they will expire is one of the highest probability options strategies there is.
Options are time depleting assets and decrease in value each day. A melting ice cube.
So, selling options on the day of expiration is as close to a sure thing in options trading that you will learn.
Let me explain
Options sellers receive money for the obligation to buy or sell the underlying within a specified time.
As options sellers, we take the other side of the option buyer’s bet based on our interpretation of Master Trader chart patterns.
Our options income strategies are designed to take the buyers’ money – literally – and get “Paid” by determining the price levels that will not be violated until Expiration!
We do this with the use of simple chart analysis, and so can you.
This is done without the use of indicators, trendlines, Fibonacci retracements or other indicators, which makes it so much easier.
Selling options on the day of expiration (0 DTE) are one of our favorite strategies since we are merely calling the high (if selling calls/spreads) or low (if selling puts/spreads) for the day! One Day!
Check out this one-day trade that we gave our Weekly Options Trader subscribers last Friday that was sent to them in this Text Message:
The Actual Charts Posted to Subscribers to Their Text Platform at the Time of Recommendation
9:47 – ROKU – selling 152.5/160 call spread for $.35/share (0 DTE), stop 152.12
The trade was closed the same day for $.01 or a $340 gain in a few hours by determining a short-term high!
The Master Trader Method (MTM) combines specific chart patterns – that we have used for decades — and volatility analysis — to sell short-term expiring options to generate income every week. It’s a deadly accurate combination and strategy.
Our Weekly Options Trader specializes in selling options and credit spreads around compelling chart patterns like the above (bullish and bearish) which expire in 10 days or less. It is designed to profit from the rapid time decay inherent in short-term expiring options.
Some trade guidelines are below
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Selling Expiring Options on Earnings, Gaps, News, and SPY
We particularly love selling options — with the charts as always — when volatility is spiked because of news, earnings, selloffs, or other market/stock fear.
This is because when volatility rises, option premiums rise. Whether from a bearish selloff or a bullish climactic run higher, we get paid much more for the options that we sell.
The SPDR S&P 500 ETF (SPY) has multiple expirations each week, giving us more profit potential to use this strategy throughout the week! One of our favorite patterns is when we get a bullish reversal on SPY after a multiple day selloff to support because premiums have been rising on the selloff.
Because of the ease of the strategy and statistical “edge” that exists in selling options around compelling chart patterns, these trades are available in all market environments – trending, choppy, or even a volatile mess.
Checklist for Selling Options/Spreads on Expiration Day
Here is what we do each option expiration day in the Master Trader Green Trading Room to look for these types of compelling setups. It is typically on Friday for most options, but also have different days depending on the stock or ETF, plus multiple days each week on SPY.
- Scan your own Universe + Gaps/News/Earnings/High Implied Volatility/Index ETFs.
- If you get a compelling bullish setup, short OTM put options/spreads, stop under support.
- If you get a compelling bearish setup, short OTM call options/spreads, stop above resistance.
- Follow your Trading Plan for profit targets and trade management.
- Close into Expiration if you want to avoid any assignment risk (which still could happen even if the stock expires OTM if the option holder gives the broker a timely exercise notice for whatever reason, such as favorable post-market news).
- Be aware of extended trading hours beyond 4 pm ET where certain stocks and options are still trading.
For those swing and day traders who use technical analysis to trade, selling options and spreads on expiration day using the Master Trader Technical Strategies (MTS) can generate consistent income.
In fact, some traders specialize in this strategy in the Green Trading Room and only trade on expiration day.
When you trade stock, you must be right on direction to profit. In selling OTM options around compelling short-term turning points, you profit from the rapid decay of the option’s value into expiration in just a few hours – and the stock can still go against you somewhat to make full profit!