As we continue with our attempts to answer the investing question, Stocks or Options?, we wanted to use today’s segment to discuss one of the key differentiating factors between owning stock and trading options – time.
While stocks have an indefinite life, options always come with an expiration date. This unique characteristic. Specifically, , ceteris paribus.
Thus, this natural, downward drift in an option’s price is advantageous for the option seller, as they benefit from lower option prices.