Trading a Long Weekend

Trading options over a long weekend can be tricky. Time decay is a brutal enemy of option owners. And the time decay clock keeps ticking whether the market is open or closed. All things considered, options will be worth less on Monday than they are today.

However, the longer the market is closed the more the chance of an unforeseen event, a Black Swan flying (see under the Education heading on this site) and there is nothing you can do about it.

So, where does that leave you? In a cautionary space, I'd say. There's nothing wrong with reducing your position size, for instance. Particularly if you have a position that is long option premium.

On the other hand, a position to put on that will take advantage of time decay is the Iron Butterfly (see my column dated February 13, 2014 for a detailed look at what that is) and perhaps today is a good day to put one on. Just be sure you keep your discipline and are not net options short in case something totally unexpected does happen.

Most importantly, however, is this: It's a holiday weekend. Forget the stupid stock market for a couple days. Spend some quality time with friends and family. Rejoice in being alive and walking this earth as a free human being.


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