Weeklies and the earnings

[ANCOLL]

Usually, I open the trade on thursday, the first day when weekly option is available, and if I dont get it, I will try again on friday..
taking the advantage of theta on weekend (as far as I know, theta works on weekend as well, correct me if I am wrong)

I keep the trade until the next thursday, close it and open a new weekly option, the tickers usually are AAPL, GOOG, SPX,
but you are right ratiogreg, the gamma is scary especially near the day of expiration,

the result is ok, but sometimes the loss is unbearable which is sometimes this **** happens.

I still figure it out how to adjust it, when it comes, usually I close the loss trade

hope my explanation is clear enough for you, coz my english is not pretty good

[ratiogreg]

Hi Ancoll,
Sorry for the long absence. There is no adjustments with weeklies.

Market makers usually start dropping the IV on thursday afternoon so that on Friday at close, all the theta from the weekend is already discounted. So you could try to hold your condor from the listing of the weekly on thursday or right after lunch, centered around the strikes with the highest open interest (the stock could pin one of these strikes at expiration), and then close the position the very next day on friday an hour before the close. Make sure you give your order enough time to execute at the price you want so you dont have give back the gain from that accelerated theta. That's a small profit, but is much lower risk, and a cleaner way to trade.

I really would avoid AAPL, but if you must (a front month IV spike for instance), keep a smaller gamma by playing an iron fly instead. You exit for a gain, or you exit for a scratch but at least you don't hurt your account. Make sure you take the money before it drains.

In any case, get in when the 10 and 20 day historical vol is on the lower side compared to the IV, and that there is no significant macro economic news expected on Friday morning. Out of 4 or 5 underlyings, there may be one that's a decent candidate.

You're english is good. Take care.

[ratiogreg]

In fact I would wait after lunch for the options to get juicy before getting in the condor, because the IV will climb as the open interest grows. So if you get short vega right at the market opens when the weeklies are listed you could end up with a loss 3-4 hours later. I know the vega is tiny on the weeklies but it's enough to mess up the whole trade. I would paper trade that a couple of times to verify. If the conditions are right, I would expect a gain of $0.4 to $0.5 before commissions (0.015x8.12) on a $5 wing condor/fly.

[Fritz]

Do you do these trades only for earnings or do you use this methodolgy for weekys in general?
I have just begun to toy with both ICs and weeklys (although not necessarily in the same trade).
Have a May IC on RUT. Just got clipped on a May IC on WFM.