Introduction to Time Decay

Time Decay is one of the most important aspects of Options and is a core strategic component of a majority of Options strategies

Time Decay

Time decay is a pivotal component of Options strategies. In fact, time decay alone is responsible for the majority of advanced option strategies. In this course, we are going to study the concept in detail. Options are "wasting" assets, and they lose value every day. The buyer gets hurt from time decay and the seller benefits from it. And time decay becomes more exponential as we approach expiry of an Option. It is also the great equalizer between the profiles of a buyer and seller of Options. The risk / reward equation is complete when you consider the position of buyers and sellers of Options. Several intermediate and advanced strategies are based on selling premium (option sellers) and these position make a profit due to decay in the value of these options over a period of time.

What you will master

  • What is time decay and how does it benefit Option sellers
  • A complete recap of buyer and seller risk and reward profiles
  • Why does the seller of Options not want movement in the Stock
  • Why is Time decay the great equalizer
  • Apply this concept to our real world examples
  • How can we observe it in Options in the financial markets
  • Demonstration of time decay using AAPL Options

Intended Audience: Options Beginner

Time Decay - I
Time Decay - II
Time Decay - III

What's included

  • 3 Video Lessons

  • Works on all devices
  • Certificate of completion

Hari Swaminathan

Instructor