Today is May 07 options expiration day. As I had shared earlier, there are two significance to this perticular day:
- Theta is fastest i.e. time value will erode at the fastest speed
- Stock option pinning is now a more visible phenomenon
How can one take advantge of these two?
If one wants to trade intraday i.e. there will be very little time value and one can play nearest in-the-money options to leverage the most. Similarly, check out the stocks that has tendency of pinning i.e. GOOG, OIH, SHLD, CME, etc. and choose your pick. You may open ATM iron condors or iron fly to benefit from pinning action.
And by the way, if you have options expiring worthless, don’t let it be. Place the the order for nearest ask i.e. $0.05 if your commission is cheap. Some one may want to close his/her spread and may buy yours and thus giving you some money vs exiring those worthless.
Check out previous posts or discuss here
Profitable trading, OptionPundit