Updated two hours later
On timing- here's a simple style I've had good luck with: When you
"see" a trade, initially execute and things don't start happening as
hoped for (immediately) then it's time for a very simple (usually very
cheap at that point) adjustment: Get out!
I'd be really interested to get your opinion on this admittedly
frequent trader's paradigm (I'm still an option rookie) but from where
I sit it looks like many "adjustments" are a stubborn refusal to be
wrong. And ironically, v-e-r-y smart guys are particularly prone to
this ill fated thinking.
In my supreme option rookie ignorance I must say- timing smells a lot
like predicting direction: Try it when ya have to and be prepared to
change your mind almost instantly.
There is nothing illustrating any ignorance in this comment. You have hit on something important.
1) I did not mean to use the word 'timing' in the traditional sense. This post, and the one that follows is concerned with deciding – on an ongoing basis – how long before options expiration is an ideal time to open a position in which we sell option premium. In other words: is it 'better' to sell that premium one, two, three, or more, months before the options expire?
This discussion includes iron condors, selling put and call spreads, naked options, covered call writing. These are premium selling strategies.
2) In this context, there is no 'start happening immediately' because what we want to happen is 'nothing.' We want time to pass without the stock moving against us.
3) Your idea is a good one. But it's for a very different type of strategy. It's a directional play – and that applies when you BUY (not sell) option premium. You are buying, and paying for, positive gamma and that comes with negative time decay (theta). So, if you don't get the move you want, then your timing is off, and it's often best to exit – and decide if and when it's time to play again.
4) As a general rule, I don't like predicting specific direction by buying options. It's not that it's such a terrible way to make money, but it involves being able to pick market direction correctly, and it also involves being able to time the market move. I cannot do that. I don't believe many people can. Thus, in my opinion, buying options is a losing game – for the vast majority.
But if you have a proven track record of knowing when to buy and sell, then buying options can work for you. It's just not for me and I shy away from talking about option-buying strategies.
5) Yes, 'timing' is an important part of 'predicting direction.'
6) I don't look at adjustments as 'refusal to be wrong.' I see it as: I already was wrong, and what should I do now? Sometimes I exit and take the loss. But when I see an adjustment that reduces risk and still leaves me with a position that has acceptable risk/reward parameters, AND (this is the part most people miss, and do indeed refuse to be wrong) is a position I want to have in my portfolio – then I make the adjustment. I do not do it, nor do I recommend anyone do it, just to avoid taking a loss – which is what you refer to as 'refusal to be wrong.'
Being wrong is part of the game, and pretending that part does not exist is foolish.
UPDATE: I received the continuation from Dave, so added it to this post.