What I mean by this aristoentretainement is that writers often tend to buy your calls/puts prior to expiration or earnings at bargain based prices eventhough you think that you made the deal of your life. Writers are experts at buying calls/puts at cheap prices and then selling those same calls/puts hours later at huge premiums. Premiums tend to jump a bunch prior to expiration but most notably prior and onto earnings. People tend to freak out and collect sizable gains at the POS but it is the writer who is making most of the money. When you sell the calls/puts prior to earnings or expiration your baiscally giving the wirte a free gift(gain). Premiums still contain an intrisnic value at the POS, so to them, they have minimal losses if the trade doesn't go their way, since it is the buyer(seller at the time), who basically provides all the comission fees to the,(buyers but at that point of time but them becomes writers).
See when a holder of a call/puts thinks that the calls/puts are worthless in a snese, they still have value of some sort, so the buyer in knowing this, will take in part or in some cases all of the intrnsic value left in the calls/puts to his bank account.
I hope it made sense, its a bit broad to understand but the idea that I wanted to convey, I hope was recieved.
Lastly, your asking yourslef, if you can do this. Of course, but being able to distinguish these trades are not easy and they usually require big pools of money to do so. Best advice I can give, is to stick trading with the "known" options and make the most of it.
Originally Posted by bigbull
Dont be, force the seller to boost your selling price prior to expiration, better yet into earnings.