Tuesday, March 19, 2024

Master Theta Decay: Maximize Profits in Options Trading

Hey Trader,

Imagine you've purchased a call option with a premium of $200, banking on the stock of XYZ Corporation to rise before expiration. 

As each day passes, you notice the value slowly shrinking, even though the stock price hasn't moved against you.  

This invisible force at work is theta decay or time decay… 

An important part of the options pricing model that eats away at an option's value as it approaches its expiration date.

While the concept might seem straightforward, the variables that contribute to the rate of decay—such as volatility and the time remaining until expiration—interact in complex ways in the way options are priced.

Luckily, we broke it down in today's article:

>> Master Theta Decay: Maximize Profits in Options Trading

Enjoy it!

Mark Soberman
NetPicks

 

 
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