Previous post showed there is a 95% chance of winning if we buy @ the close on the Friday before expiration (8/9/2013)  Friday before option expiration week but I also pointed out that for August expiration, we should NOT buy if Fri before expiration is the 7th trading day of August (which is 8/9/2013, previous Friday). Friday before August option expiration. When looking at these systems, we have to be aware of the win/loss ratio and be sure to honor the stop (for me it is almost always 2.5%).

If you were to execute this 95% trade on 8/9/2013, you would still get a 0.16% gain on the first profitable open but after factoring in commission and slippage, you don’t have much of a gain to look at.

If you are using on close only exit strategy and without a stop loss, then …..you might have a 2% loss.

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