Why not? Trade on Fridays after 1 p.m.
The setup: It’s not a secret that when you buy options on Fridays, you are buying two days’ worth of time decay. You can’t just sell them – or add to them if the movement calls for an additional buy – on the weekend. But you are also vulnerable to the news and the current events. One big global headline that shakes a sector can put you in real trouble.
Now couple that with today’s news. I’m not getting political here, but I have been thinking that the variety of stormy news about President Trump – he’s being investigated, he’s Tweeting out policy statements, you know the stuff that’s out there – creates big headline risk.
The decision: Coming from an options trader, it might sound weird to say I am not high risk, but I am not rushing into territory where the risk level is especially heightened and unpredictable. To me, right now, that’s after 1 p.m. on Fridays.
I’m still willing to buy ETFs at that point — though it will take a convincing case to make me do it — but it would take something pretty special for me to go with stocks or options late on a Friday.
Moral of the story: Time decay plus any potential news shock creates a danger zone; it’s a lesson and a mistake that traders too often learn the hard way. I’ll be looking to see if/when things settle down to where I’ll play late Fridays again; I hope I don’t have to wait until 2020.