Closing Positions, Rollover, & Expiration Strategy

this is the transcribed version of the podcast linked above ^^^

Matt: [00:00:00] Hello I would like to talk to you about the one minute trader we are here to take the time strapped trader and turn them into a profitable, money making machine with daily ideas that give you, the trader on the go, reason to trade with risk defined and profits taken when able. I’m Mat Davio and this is the One Minute Trader Podcast.

Brint: [00:00:56] Do you need to close your positions or roll over and have an exploration strategy?

Matt: [00:01:02] Yes. That again is a good question especially when it comes to futures and options and options on futures. There are expiration there. There are products that have a defined time expiration. So in the stock world you could buy a call or a put on apple and typically they’ve got expirations anywhere from every month to now three times a week with the bigger stocks. So Apple, IBM, Cisco, Amazon, and there’s many more products that are able to be traded on the options floors. And you definitely need to be aware. It’s even more important the futures exchanges because there are expiration dates for each future. And the easiest way to look at it is the U.S. financials. They’re really the simplest product because they only have four expirations annually. So each quarter. And so you need to know that the the third Friday of each quarter and the way they work in the financials is that goes January, April, June, September, Back to January. So basically you have four times a year that you’re going to be rolling over the product. So the third Friday or the third Friday in June which is where we are right now. You’re going to expire and they start expiring in the week before and you need to know when that expiration is. Otherwise, In the sense of oil and beans and things like that if you don’t expire and you’re long they’re going to ship you bushels of soybeans or gallons of crude. So you definitely don’t want that to happen. Same thing with livestock any of this stuff that trades real items. Again you have a multitude of players you have speculators you have commercials who are the those that are producing the cattle to sell at the at the meat markets. You’ve got oil all the different producers there from natural gas down and they look at those products. Sometimes they want to take delivery because they’re going to use and in the sense of airlines they buy futures all the time knowing that that oil is going to be used in their airplanes. So they’ll try to lock in prices. And then when the delivery day comes they’re like OK shimmy shimmy my oil I was long as we’re in the money. But I bought it cheaper so depending on the buyers and sellers, some will want to take delivery of the product. But if you’re not if you’re in the business of speculation you definitely want to have a calendar. Go to the CME Web site or the CBOT. You know any exchange that you’re looking at the different options exchanges they all tell you when the expiration is with options on stocks. If you sell 10 it’s like having a thousand shares so each contract usually in stock world is worth a hundred shares. So 10 contracts is the equivalent of 1000 shares of whatever stock. If you’re buying puts that gives you the opportunity to sell if you’re buying calls and gives you the opportunity to buy if you’re selling calls. That’s the same as being synthetically short via a price. If you’re selling puts it’s like again being synthetically long. So all these different expiration terms and and dates. You definitely need to have calendars if you’re going to be active in these things if you’re not you’re going to get into a situation probably that is going to be pretty uncomfortable. And there’s always a way out of it but it’s usually more expensive and it takes more time than you probably had originally originally anticipated especially if you’re just trading. So be aware of those expiration dates. Understand the products how they work. Make sure you’re out of them a week early. That way you’ve got a couple of days if you forget. But the rollover usually starts a week before the expiration get ahead of the curve. That’s when most pros get out don’t wait for the last minute when it gets really strange. So expiration dates on options and futures. Very important to understand them. Read up on them and make sure that you’ve got a good understanding. And finally before you even begin to get into those more exotic instruments.

 

[00:05:33] The one minute trader was developed to bring you fresh trade ideas every day of every trading week. Make sure you go sign up for our invaluable one minute trader daily emails along with our five minute video emails to get timely insights into evolving trade possibilities. Let one minute trader be your second set of eyes for trade opportunities that may have passed you by. We appreciate you listening today to the podcast and we hope you’ll support the show by leaving us a positive ratings on whichever platform you’re tuning in from. I’m Matt Davio and this is the one minute trader podcast.


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