The Best Theta Decay Options Trading Strategy

The Best Theta Decay Options Trading Strategy

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Theta decay is the rate at which the value of an option declines as time passes. Theta is a measure of the time value of an option.

All else being equal, the longer an option has until expiration, the more valuable it is. That’s because the option holder has a greater chance of the underlying stock price moving in the desired direction.

Theta decay accelerates as an option approaches expiration. When options are deep in-the-money or out-of-the-money, their time value expires quickly.

 

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The Best Theta Decay Options Trading Strategy

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The Best Theta Decay Options Trading Strategy

 

 

At-the-money options have more time value because there’s a greater chance of them becoming in-the-money before expiration.

Options traders must be aware of the effects of time decay when planning their trades. Theta decay can work against a trader holding long positions (options that give you the right to buy the underlying asset at a certain price) by eroding the value of those options.

On the other hand, traders holding short positions (options that give you the right to sell the underlying asset at a certain price) can benefit from time decay. That’s because as the option loses value, the trader can buy it back at a lower price and pocket the difference.

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He started from nothing and became a multimillionaire…

He’s now one of the most sought-after trading experts…

Yet he operates 858 miles from Wall Street.

And now, he’s revealing his #1 favorite strategy that targets MASSIVE weekly profits with just one stock ticker.

 

>>SEE THE PROOF HERE<<

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The Best Theta Decay Options Trading Strategy

The best way to trade theta decay is to sell options that are about to expire. This is known as writing options or selling options premium.

By selling options, you’re collecting the time value premium as income. As long as the underlying stock doesn’t make a big move, you’ll be able to keep that premium when the option expires worthless.

Of course, there’s always the risk that the stock will make a big move and the option will end up in-the-money. This is why it’s important to use a stop loss when selling options. A stop loss will help you limit your losses if the stock does make a sudden move.

MY favorite strategy for using theta decay is to sell weekly options that are about to expire. I like to do this because it allows me to collect premium on a regular basis.

It also allows me to take advantage of the accelerated time decay that occurs in the last week before expiration. By selling options that are about to expire, I can realize profits even if the stock doesn’t make a big move.

The key to this strategy is to pick the right stocks. You want to choose stocks that are not likely to make big moves. This way, you can collect the premium and let the option expire worthless.

To find these stocks, you can use a stock screener to look for stocks with low volatility. You can also look for stocks that have been trading in a tight range for a long period of time.

Once you’ve found a few stocks that fit this criteria, you can start selling options on them. I like to sell options that are about to expire in the next week.

This way, I can take advantage of the accelerated time decay. And if the stock doesn’t make a big move, I can keep the premium when the option expires worthless.

Of course, there’s always the risk that the stock will make a big move and the option will end up in-the-money. This is why it’s important to use a stop loss when selling options. A stop loss will help you limit your losses if the stock does make a sudden move.

 

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The Bottom Line: The Best Theta Decay Options Trading Strategy

The best way to trade theta decay is to sell options that are about to expire. This is known as writing options or selling options premium.

By selling options, you’re collecting the time value premium as income. As long as the underlying stock doesn’t make a big move, you’ll be able to keep that premium when the option expires worthless.

Russell

 

FREE EBOOK: How to Earn Consistent Monthly Profits Selling Options

 

Limited Time Deal to Purchase Nate Bear’s Profit Surge Trader ASAP HERE

You can also watch a full interview with Nathan Bear discussing the Profit Surge Trader system here.

*******************************************

Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move

                                                             GainzAlgo Review

He started from nothing and became a multimillionaire…

He’s now one of the most sought-after trading experts…

Yet he operates 858 miles from Wall Street.

And now, he’s revealing his #1 favorite strategy that targets MASSIVE weekly profits with just one stock ticker.

 

>>SEE THE PROOF HERE<<

*****************************************

 

 

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