Time Decay - Market Analysis for Dec 30th, 2016

Dec 30, 2016 - 11:04 AM EST

I got a question about time decay for options and I think it is good to share it here with all of you. The attached image is from my web book (which is still a work in progress): http://www.anixcorp.com

As you can see from the plot, time decay becomes stronger during the last 3 weeks of life of an option. So if you have a long term position that is making money and is coming up around that time period, it makes sense to cash in the profits that you have so far, and if your thesis is still valid then get a farther out option (with a different strike too) to play the remaining upside (or downside depending on your trade).

SPX theta

Leo Valencia hosts the Gamma Optimizer options service at ElliottWaveTrader.net.

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