I was just looking at some possibilities for paper trades today, and got a thought I felt I should jot down while it was in my head. I've had this one in my head before, but failed to do anything about it. Strangely, I often go against those ideas if I don't write them down or post them in some way.
One of the rules I feel one should use if one is swing trading these volatile stock options is what day you should initialize the trade. Unless there is an extreme situation (like a stock gaps way beyond a range in the direction it was going and begins to pull back rather quickly), you should tend towards starting a trade in the beginning of the week. Monday or Tuesday is best. The main reason for this is, you want to put as many odds in your favor as possible, and the weekend days count as time as well, when you are talking about days until expiration. Your position will always erode, price wise, over those two days that nothing can happen. Sometimes 3 days, if there's a holiday, which is another thing to consider. I would almost NEVER start a trade before a holiday weekend. It can degenerate on the days something CAN happen, but you stand to make some profit and possibly be out of the position in that time. And this is especially true when you are looking for cheap options, usually within a week or two of expiration. Ideally, I don't want to hold these things for more than 2 or 3 days anyway, and when those 2 or 3 days are days where nothing can happen, it seems pretty dumb to start them before that.
Just a thought...
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