Options are unique in the trading world in that we can assign and trade the value of time. The greek Theta is used to describe this value of time. In today's segment Beef and Anton jump into this topic starting from the very beginning and working their way through how theta affects our trading style.
Using the tastyworks platform the guys compare two options both at the same strike but with different time frames. Using an insurance example Anton walks us through why we see different prices associated with each.
The guys end the segment looking at the 45 day window that we often trade, and explain how theta is actually the reason we default to this time frame.