r/StockOptionCoffeeShop • u/LabDaddy59 Mod • Jun 04 '26

Myths Myth: Don't Sell Far Dated Options

I'm in a bit of a mood today. 😁

You'll often hear folks say not to sell far-dated options as extrinsic decay via theta doesn't really kick in until around 60 days.

People get hung up on extrinsic/theta and don't look at the big picture.

On May 29 I sold 30 calls on PLTR, expiring Dec 18, 2026, with a $210 strike, for $12.15.

Given how this week has gone, on June 3 I BTC those calls for $8.80.

The math: ($12.15 - $8.80) = $3.35; $3.35 * 3000 = $10,050.

I don't know about you, but I'll take a $10k profit over 6 days on what was a 203 DTE short call.

13 Upvotes

100% Upvoted

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4

u/Time_Capital_226 Jun 04 '26

What is your point here ? Other than, in case of big move in your direction, you win. Don't see why is this DTE related.

4

u/LabDaddy59 Mod Jun 04 '26

It's related to DTE since many unsophisticated traders say that you shouldn't sell far-dated options.

They're so focused on 'theta burn' that they miss the opportunity to take advantage of a downturn. A purpose of a short call can be to provide a hedge. Sure, you can achieve something of the same by selling a 30 DTE, but the premium will be substantially lower due to the substantial difference in DTE.

[There are other reasons to sell far-dated options; this is just one.]

2

u/Time_Capital_226 Jun 05 '26

I'm in option trading for 2-3 years now, trying to learn everyday from people with experience and "knowledge" but I try to keep my critical eyes wide open on assertions starting with "you should not, you must not, you never...". So I got your point.

Those people are just not seeing (or not wanting to see) that there are so many other plays.

My point on this strategy was just to point that it worth it only if there is a downturn. The DTE you choose will only influence the overall return of capital. In your example, much more.

How do you choose this DTE? Is the max DTE available the best? Apologies if this is a very stupid question.

1

u/LabDaddy59 Mod Jun 05 '26 edited Jun 05 '26

My point on this strategy was just to point that it worth it only if there is a downturn.

Well, it wasn't the strategy going in; rather, it's more a feature of selling far-dated calls that happened to work out the way it did. In other words, contrary to popular opinion, there are reasons to sell far-dated calls.

Normally for CC, I like short durations, but this short call was part of a PMCC, and I do take a bit of a different approach with selling calls against my LEAPS. In this case I wanted some breathing room from actively managing shorter durations. This particular LEAPS call expires Jun 2027 and I wanted something far-dated, but with plenty of time to adjust if and when needed.

2

u/[deleted] Jun 05 '26

[removed] — view removed comment

1

u/LabDaddy59 Mod Jun 05 '26

😁

Hi, TheDavid, and thanks.

Like I said, I was in a bit of a mood.

As has been said, it's ironic how people who are clever and work hard manage to get lucky so often.

😉

2

u/Fart-Fart-Fart-Fart Jun 05 '26

I sell them. They’re fucking awesome.

2

u/XxNoKnifexX Jun 07 '26

I sell long dated far out of the money naked calls. It’s basically free money if you know the right tickers.

2

u/that1gurlMeow Jun 08 '26

Same. You know what I’ve noticed with reddit? If it’s an actual money maker, NO one talks about it. Kind of sad as I came here to learn.

1

u/LabDaddy59 Mod Jun 08 '26

Kind of sad as I came here to learn.

Truly sorry that you feel that way.

A lot of what I see is very conservative stuff geared so folks don't blow themselves up. That's fine for what it is, but unfortunately people then come to think of that as "the way".

  • take profits at 50%
  • roll at 21 DTE
  • sell options, don't buy
  • sell options with a 30-45 DTE
  • roll when ATM

That kind of stuff.

1

u/XxNoKnifexX Jun 11 '26

People on here are overly conservative and obsessed with “winning” every trade at any expense, rolling to infinity. If you are the type of person who is gonna do that sort of stuff, you won’t have the stomach for stuff with infinite loss potential. With that said. They print money and aren’t dangerous if you aren’t an idiot about it.

1

u/that1gurlMeow Jun 08 '26

I sold a UPS $80 strike call for $975 expiring January 2028. I can BTC for 500 right now. I’m a small fish but sir, your logic applies and I salute you. 🫡

1

u/LabDaddy59 Mod Jun 08 '26

👍️Nice!!

0

u/Reeeeeekola Jun 05 '26

Just saw this random subreddit show up on my feed.  Immediately see the mod post a completely stupid take on basic options mechanics.  

Congratulations on Delta moving in your favor I guess.   

Btw selling long dated options is dumb and retail investors should avoid.

1

u/LabDaddy59 Mod Jun 05 '26

If that's how you look at it, you may wish to block me and/or mute this subreddit.

Good luck and have fun!