Hi,
On the expiry day of Options which is the best strike price for writting? ATM or little OTM and why?
Regards,
Jigar.
Since you are writing on the day of expiry, I guess you want to remain long on the stock and collect a little premium. So go for the OTM. On the other hand if you don't mind losing the stock, then go closer to ATM. Basocally, OTM is less risk and less reward. ATM is more risk but more reward in terms of premium collected.
Hi Jigar,
On the day of expiry, the delta component is more important than the theta component. In other words, it is important to see the market direction and your strike price, rather than the time left to expiry. As rightly pointed out in the answer above, the OTM strikes will give you a smaller reward, for lesser risk exposure.
As an added precaution, please make sure to close your open positions before the end of the trading day to avoid unexpected loss due to the post-market settlement.
Hope this helps!