Timing is everything when selling options. The difference between selling at the right moment versus the wrong moment can mean the difference between a profitable trade and a losing one. In this comprehensive guide, we will explore the best times to sell options to maximize your premium collection and improve your win rate.
Why Timing Matters When Selling Options
When you sell options, you are collecting premium from buyers who are paying for the right to buy or sell a stock at a specific price. The amount of premium you collect depends on several factors that change throughout the trading day and week.
Key insight: Options sellers want to collect the highest premium possible while minimizing risk. This means selling when volatility is elevated and time decay is working in your favor.
Best Time of Day to Sell Options
Morning Session (9:30 AM - 11:00 AM ET)
The first 90 minutes of the trading day often present excellent opportunities for options sellers. During this window, you will typically see wider bid-ask spreads and higher implied volatility as the market digests overnight news and finds its direction.
- Volatility tends to be elevated from overnight gaps
- Premium is often higher than later in the day
- Best for selling puts after a gap down or calls after a gap up
Midday Lull (11:30 AM - 2:00 PM ET)
The midday period is generally the quietest time for options selling. Volume decreases, spreads can widen, and premium tends to be lower. Most experienced options sellers avoid initiating new positions during this window unless they have a specific catalyst.
Power Hour (3:00 PM - 4:00 PM ET)
The final hour of trading sees increased volume and activity. This can be a good time to close winning positions but may not be ideal for opening new trades due to the uncertainty heading into the close.
Optimal Selling Window
Many professional options sellers focus on the 10:00 AM to 11:00 AM ET window. By this time, the market has established its direction, volatility has stabilized, and you can make more informed decisions about strike selection.
Best Day of the Week to Sell Options
Monday
Monday mornings often see elevated implied volatility due to weekend risk. This can be an excellent time to sell options, especially if there was significant news over the weekend. However, be cautious of gap risk if you are already in positions.
Tuesday through Thursday
These middle days of the week are generally considered the best for options selling. The market has established its weekly trend, and you have enough time until Friday expiration to benefit from time decay without excessive overnight risk.
Friday
Friday is a double-edged sword for options sellers. On one hand, same-day expiration options experience rapid time decay. On the other hand, gamma risk is highest on expiration day, meaning small moves in the stock can result in large changes in your position value.
Best Time in the Monthly Cycle to Sell Options
45 Days to Expiration (DTE)
Research has shown that selling options around 45 days to expiration provides an optimal balance between premium collection and time decay. At this point, theta decay begins to accelerate while you still have time to manage the position if it goes against you.
The 45 DTE Rule: Many professional options sellers open positions at 45 DTE and close them at 21 DTE, capturing the sweet spot of theta decay while avoiding the gamma risk of expiration week.
21 Days to Expiration
This is often the ideal time to close winning positions. You have captured most of the time decay, and the remaining premium does not justify the increased gamma risk of holding closer to expiration.
Best Market Conditions for Selling Options
High Implied Volatility
The single most important factor for options sellers is implied volatility (IV). When IV is elevated, options premiums are inflated, giving sellers more credit for taking on the same amount of risk. Look for situations where IV is above its historical average.
- Check IV percentile or IV rank before selling
- IV above 50th percentile is generally favorable for sellers
- Avoid selling when IV is at historically low levels
After Volatility Spikes
Some of the best opportunities come after fear events. When the VIX spikes due to market uncertainty, selling options can be highly profitable because IV tends to mean-revert over time. As volatility contracts, your short options lose value faster.
Before Anticipated Events
Selling options before earnings, Fed meetings, or other catalysts can be profitable because IV tends to be elevated. However, this strategy carries significant risk if the event moves the stock more than expected. Many sellers prefer to wait until after the event when IV crush occurs.
IV Crush Example
A stock trading at $100 has earnings tomorrow. Implied volatility is at 80% versus a normal level of 40%. After earnings, even if the stock moves 5%, IV might drop to 45%, causing significant value loss in options. Sellers who sold before earnings can buy back their options at a lower price.
Strategies for Different Time Frames
Short-Term Sellers (0-7 DTE)
If you prefer trading weekly options, focus on selling on Monday or Tuesday for Friday expiration. This gives you maximum time decay while avoiding weekend risk. Be aware that gamma is higher, so use tighter stop losses.
Medium-Term Sellers (30-45 DTE)
This is the most popular approach among professional options sellers. Sell around 45 DTE, manage at 21 DTE, and repeat. This cadence allows for consistent premium collection with manageable risk.
Long-Term Sellers (60+ DTE)
Selling longer-dated options requires more capital and patience, but the probability of profit is generally higher. This approach works well for covered calls and cash-secured puts on stocks you want to own.
Common Timing Mistakes to Avoid
- Selling during low IV: You receive less premium for the same risk
- Holding through expiration: Gamma risk increases dramatically in the final days
- Ignoring the calendar: Avoid selling before holidays or long weekends when markets are closed
- Chasing premium: Higher premium usually means higher risk - make sure you understand why IV is elevated
- Trading the open: The first 15 minutes have wide spreads and unpredictable moves
Track Your Options Timing
Pro Trader Dashboard automatically tracks when you enter and exit trades, helping you identify your most profitable timing patterns. See which days and times work best for your strategy.
Summary
The best time to sell options depends on multiple factors including time of day, day of week, days to expiration, and implied volatility levels. Generally, selling between 10-11 AM ET, on Tuesday through Thursday, around 45 DTE, when IV is elevated above historical averages provides the optimal conditions for options sellers. Always track your results to identify what timing works best for your specific strategy and risk tolerance.
Ready to learn more about options timing? Check out our guides on when to buy options and weekly options timing strategies.