Selecting options or writing uncovered options

["Guy Tann" <grt@xxxxxxxxxxxx>]

List,

Well, here I come again from our normal position of ignorance.

We're planning on getting more involved with options.  For our next sell
signal that could arrive any day now, we plan on writing SPX Calls and OEX
Calls in addition to buying SPX and OEX Puts.  We have very little
experience buying options and have had beginners luck with our first 5
trades.  Now we're going to get a little serious here and try to make a few
bucks.

We've each budgeted $10,000 for buying options and another $10,000 as our
exposure writing options.

Now, I'm busy reading my option book, like a good little student.  Since we
lucked out with our previous trades we're feeling overconfident. :)  I do
have a question regarding buying options (since I haven't gotten to that
chapter yet):

How should I select what option to buy?  Currently I select 'in the money'
options and look for option months that have a pretty large open interest.
Is there a formula or a decision process we can apply to pick the right
option month?

In terms of writing uncovered options, my question is basically the same.
How do we determine which options to write?  I guess, even more important
is, do we write options that expire out 3 months or would we write the near
month options?  Again, since we're short term traders and will probably be
buying these back before they expire, my guess is that we should write the
near month.

Additionally. my idea is that we should write 'in the money' options with
pretty good open interest.  Again, I'm sure there is a methodology somewhere
that would help us make a semi-intelligent decision.

Any recommendations or thoughts would be appreciated.

Thanks,

Guy

Paranoia...you only have to be right once to make it all worthwhile!