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Trading options with more than a year till expiration


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Trading options with more than a year till expiration

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  #1 (permalink)
New York New York
 
 
Posts: 5 since Apr 2017
Thanks: 3 given, 0 received

Greetings,

I am looking to buy options (puts or calls depending on the market) that have 365 days or more until expiration. I am wondering if there will be any issues with the liquidation of the options.

Example:

1-If I owned one 97.25 Eurodollar Jun 18 put and I wanted to liquidated it in Nov 17. What (if any) issues will I run into?

If you need more information please let me know.

Thanks

Eddie

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  #3 (permalink)
Market Wizard
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punter1 View Post
Greetings,

I am looking to buy options (puts or calls depending on the market) that have 365 days or more until expiration. I am wondering if there will be any issues with the liquidation of the options.

Example:

1-If I owned one 97.25 Eurodollar Jun 18 put and I wanted to liquidated it in Nov 17. What (if any) issues will I run into?

If you need more information please let me know.

Thanks

Eddie

Have a look at open interest and volume. Eurodollar futures have a large volume for 2018 or 2020 contracts, and I assume the same is valid for the corresponding options. In other markets volume is negligible for these years, and you might run into problems in case you want to liquidate.

Best regards, Myrrdin

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  #4 (permalink)
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Keep in mind the Delta of a long dated option will react less to moves in the underlying market due to its low Gamma compared to an option much closer to expiration. This helps with an adverse move but hinders profits in a favorable move.

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  #5 (permalink)
New York New York
 
 
Posts: 5 since Apr 2017
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Bookworm View Post
Keep in mind the Delta of a long dated option will react less to moves in the underlying market due to its low Gamma compared to an option much closer to expiration. This helps with an adverse move but hinders profits in a favorable move.

Thank you very much for the reply.

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