8 Ways to Reduce Your Commission Costs

#8 Let Options Expire

When you are an option writer, the name of the game is to write an option and let it die. Let it pass on, thereby incurring only one commission — the commission to move into the position.

One caution here: In many cases, an option will become almost worthless long before it expires. In these situations, it is best to cover your positions and use your money wisely in other areas. Whenever you write naked options, there are margin requirements that must be put up, and if you are letting that money sit because you are holding a naked option, you are wasting the use of that money.

In addition, when you are writing an option, there is a theoretical risk, and you don’t want to continue to hold that risk for just one-sixteenth or one-eighth. So, although it is wise to let your option expire, should they become almost worthless before their life comes to an end, go ahead and take profits, cover those positions, and put your money to use in some other option strategy.

For more help with commission costs and selecting a broker, visit OptionsZone’s Broker Center.