The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about late expiration reversals and why they are more common than you think. I think a big misconception in this industry is this idea of getting out of a position quickly or too quickly before you actually reach expiration, but the reality is that the probabilities are calculated all the way to expiration. Now, I tell people this often in email when they email in say three weeks or two weeks before expiration and the position’s going sideways or it’s not profitable. They ask, “Should we get out of the position? Should we adjust the position?” Many times, you shouldn’t do anything because the probabilities did not say it was a 70% chance of winning three weeks before expiration. The probabilities suggest that it’s a 70% chance of winning at expiration and that’s a really important distinction because many people think that if a position is losing and it’s two weeks before expiration tha