It's Friday. The theta burn on weekly options is always something to watch closely. For anyone holding short premium into the close, how are you sizing your positions to account for potential late-day swings?
I actually don't mind holding some short premium into the close on Fridays, assuming the underlying is stable and IV isn't through the roof. The decay can be quite nice if you pick your spots carefully.
Definitely. I try to keep my weekly premium positions small enough that a sudden swing won't blow up the account, but large enough to make the theta decay worthwhile. It's a tricky balance.
Definitely. I've found that cutting down position size significantly on Friday afternoons for weekly shorts helps mitigate a lot of that late volatility risk. Are you typically closing or just reducing?
Always a tricky balance. I usually scale back my position size significantly on Fridays, especially if it's been a volatile week. Better to leave some on the table than get crushed by a late swing.
Good point. I try to target options expiring far enough out that the Friday burn isn't as critical, but for weeklies, it's definitely a factor. What kind of deltas are you usually targeting for those short premium positions?
Good point about Friday theta burn. I tend to reduce position size significantly on Friday afternoons for weekly premium, especially if it's already a profitable trade, or just close them out entirely before the last hour.
Definitely. It's a tricky balance between collecting that last bit of decay and the increased gamma risk into the weekend. I'm usually cutting positions well before the bell or sizing down significantly.
For me, it's about setting hard stop-losses. I size based on my maximum acceptable loss for that specific trade, regardless of the day of the week. Friday just means I'm extra vigilant.