Options Jive

Monday – Friday | 8:40 – 9:00a CT

Impact of Time

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Options are decaying assets, which means their value erodes over time, all else equal. This creates opportunities for option sellers and is a cost to option buyers. We measure this decay in dollars per day using the greek, theta.

We find that probability of profit is related to theta. The higher the POP, the higher the theta and vise versa. Taking a look at some trades, we see that trades with a POP of more than 50% have positive theta, and below 50% having negative theta. This means that if you collect theta, you have some wiggle room if the price of the stock or implied volatility moves against you.

Options Jive More installments

See All »

Latest tastytrade Videos As of May 25

Most Shared From the last 30 days