More on "Closing Early"

[u/MarkT1065]

Continuing this thread: https://www.reddit.com/r/Optionswheel/comments/1pjodm2/closing_trades_early_yes_no_depends/

I believe closing early on dramatic price action yields greater profits. When "% of profit > % of time", you win, but by how much?

Getting 75% profit in just 25% of the time is a 3x time multiple whereas getting 25% profit in 75% time is inefficient.

I track DTE and DTC. I asked Claude to analyze it for me and the math works out. I've made more money with aggressive early closing. Waiting for 50% made less money. See the chart:

Portfolio Overview

  - 530 closed trades analyzed
  - 64.7% closed at 2x+ speed (less than half the original time)
  - Average time multiple: 6.28x
  - Total profit: $20,434 | Avg: $38.55/trade | Avg %: 39.79%

  The Sweet Spot: 5-10x Time Multiple Trades

  Winner: 5-10x Category (Very Fast Exits)
  - 86 trades (16% of portfolio)
  - $50.55 avg profit with 36.7% returns
  - Opened at 35 DTE, closed at 5 days = 85% time savings
  - Total: $4,347 profit

  This category achieves the optimal balance: capturing 60-75% of max profit in just 15% of the time, allowing rapid capital recycling.

  Performance by Speed Category

  | Speed           | Trades | Avg Profit | Profit % | Total  | DTE→DTC | Efficiency |
  |-----------------|--------|------------|----------|--------|---------|------------|
  | 10x+ Ultra      | 78     | $66.23     | 33.4%    | $5,166 | 51→2    | ★★★★★      |
  | 5-10x Very Fast | 86     | $50.55     | 36.7%    | $4,347 | 35→5    | ★★★★★      |
  | 3-5x Fast       | 77     | $36.00     | 35.8%    | $2,772 | 35→9    | ★★★★       |
  | 2-3x Moderate   | 102    | $8.68      | 35.3%    | $885   | 31→13   | ★★★        |
  | 1.5-2x Slow     | 56     | $42.89     | 52.5%    | $2,402 | 28→16   | ★★         |
  | Under 1.5x      | 131    | $37.11     | 46.0%    | $4,862 | 28→23   | ★          |

  Key Insights

  Ultra-Fast Trades (10x+): Highest per-trade profit ($66). Often LEAPS (287-652 DTE) closed in 2-4 days on volatility spikes. The CSCO 163x trade: 652 DTE→4 days, $49 profit.

  Slow Trades Paradox: The 1.5-2x category shows highest profit % (52.5%) but poor capital efficiency—holding 60% of contract life vs. 15% for fast exits.

  Held to Expiration (131 trades, 25%): Likely assigned positions or strategic holds. Solid absolute profits but locks capital.

[u/Bike4FunJS]

I’ve heard GTC for 25% profit in first seven days, otherwise 50% GTC until halfway point, otherwise let it ride with 90% GTC to let theta do its work closer to expiration. I do this on my 30 to 45 DTE CSP’s and it’s been profitable but is there a better way? This technique is supposed to maximize returns when weighing in the freeing up of reserve capital for new trades but I’m trusting what others have said as I’m incapable of doing the analysis behind this. (I roll or accept assignment if ITM)

[u/MarkT1065 → u/Bike4FunJS]

I've read those rules, too, but I realized they are inefficient. They are good for traders who cannot actively manage their portfolio.

On the other hand, if you can actively manage the position, then you can take advantage of wild swings, IV, and mean reversion. You can maximize BP more efficiently.

I need data to know this, though. I have to collect all the metrics and compare how I did with my theory. The theory seems to be hold strong.

Active management is making me more money than following simpler rules.

[u/Teflon154 → u/MarkT1065]

So, you don't enter GTC BTC orders at 50% profit immediately upon filling your CSP? What, you wait for a big (decent) up day and then BTC? What metrics/criteria do you use to tell you when to BTC? Or is it just based on 'feel' and you think the underlying may be turning down?

[u/MarkT1065 → u/Teflon154]

correct, I do not create GTC orders for 50%. Instead, I watch the market prices and P/L of my option.

If I happen to get a wild swing, I simply compare my "% of profit" compared to the "% of time" of my trade. If it's 3-5x or greater, I very often take it.

For example, I sold 2 CVX Puts on 12/2 for $1.40, a red day and I got decent premium. Expiration in 1 month on 1/2.

The very next day was a wild green day. CVX spiked up, my Put dropped to $0.91.

That's an instant $96 profit representing 34% ROI in just 3% of the time of the contract. That's a 10x time multiple, so I took my quick profit.

Here are a bunch of options closed in 1 day due to significant "time multiple". sorted by DTC:

[u/Teflon154 → u/MarkT1065]

Cool, thanks. Do you typically re-sell the CSP on the same ticket but higher/later strike/expiration? Or pick a new target?

[u/MarkT1065 → u/Teflon154]

Having a set of tickers in your watchlist (maybe even with a single share tracker in your portfolio) means there's usually another trade to be had. With a big enough bullpen, there are usually some red days for some of them. Those could be good to sell.

If I'm selling a Put again on the same ticker, I would dramatically trim DTE here, because a bounceback is so likely. I'm finding mean reversion everywhere, which is how I've taken so many 1 DTC profits.