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.


Davis Martin is the publisher of DailyProfitMachine.com. He is a swing trader in stocks and stock options, and trades SPY calls and puts daily but, as detailed in the article, he has no plans to trade stocks and options late in Friday trading sessions for the foreseeable future.
Author: Davis Martin

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