Favorable situations to sell options arise after sharp price fluctuations
Volatilities and option prices rise.
Selling puts in particular is lucrative, as negative events are often priced in and the margin of safety is increased. Your risk decreases.
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If there is uncertainty regarding the choice of securities, index options, especially put options, can be sold, as these usually have lower volatilities than the suitable individual securities
After strong swings, specific and more lucrative stock options can then be written on individual stocks, which then enable higher option premiums.
Choice of term
It is advantageous to choose a shorter term, as the current value falls sharply towards the end of the term. It is then possible to sell again at current value and the premium income increases over time.
TIME IS YOUR FRIEND!
“Fast” repurchase of the option
It can often make sense to buy back a sold option quickly if the time value of the option is only low, for example if the underlying has moved too far away from the strike price.
It then makes sense to sell a new option with a high time value or to select an alternative security for the option sale.
“Trend trading”
If a stock is in an intact upward trend, it can make sense to buy back the sold option with a low time value and sell a new option with a high time value; corresponding “dips” in the share price can be used profitably in this way; for example, to write new puts with a corresponding time value.
Covering and renewing
When the sold option approaches the end of its term, the time value falls towards “0”. At such times, it may make sense to buy back the option and take out a new one with a correspondingly profitable time value.
This makes particular sense in times of rising volatility, as the option prices, i.e. the time value premiums, increase accordingly.
Take the opposite side
If the sold option is heavily in the money, or the intrinsic value significantly exceeds the time value, it may make sense to cover the option and take the opposite side: for example, after buying back the sold call, sell the security and sell a put on this security with a lower strike price.
This helps to discipline your own actions and avoid phases of exaggeration.
IMPORTANT: Only sell options on securities that you actually want to own!