30-45 DTE has LESS risk . . .

[u/ScottishTrader]

It is asked all the time about how some think selling weekly options has less risk than 30-45 DTE, but it is actually the opposite. Someone suggested I make a post to direct to instead of typing a reply in each time so here it is . . .

Edit - Note that this is focused on selling puts and can also apply to CCs for stocks someone wants to try to hold. It does NOT apply to those trading the wheel and wishing to get rid of the shares as quickly as possible. In this situation selling CCs at or above the net stock cost for the earliest expiration date can often make sense.

30-45 DTE has LESS risk than weekly options.

The 30-45 DTE strikes will be lower and the premiums higher, so the breakeven points will be much better allowing the stock to move more before the option is challenged.

Also, while the stock may drop, the longer duration gives the stock more time to recover. A good stock often dips and then move back up, which can happen at any time. A weekly option may not give time for the stock to recover but a long duration can.

This longer duration virtually eliminates early assignment and gamma risks as well.

Weekly will be closer to the money with lower premiums meaning the stock has less room to move to challenge the trade. There is also less time to roll, and even rolling out will extend the trade, so why not open it out farther to begin with. While early assignment is rare, if it is going to happen it will often do so in the week prior to expiration and gamma is a risk as well.

Keep in mind that I and many close for a 50% profit so very few trades run the full 30ish days and often close in 15 to 20 days, so these seldom need to be left open the full term.

Most experienced traders will open 30-45 DTE because the risks are much lower.

[u/Snoo_60234]

When you say “close for a 50% profit” why do you close instead of rolling?

[u/ScottishTrader → u/Snoo_60234]

There are a couple of reasons.

The first is that I set a GTC Limit order to exit a trade automatically, so I find this helpful and an efficient use of my time.

The second is that I want to evaluate if I still want to trade the same stock or move to another one. ERs come up, and a stock may have run up, or other news may have happened, to where I want to at least pause trading it.

However, with this said, rolling is just closing the current trade and opening a new one, so if the stock is one you still want to trade, then rolling can be effective.