About author: Ron Ianieri is a professional options trader, former floor trader, and market maker on the PHLx options exchange. As co-founder of the Options University, Ron teaches hundreds of aspiring options traders from all over the world how to trade options \'the right way\'. Click here to learn more: optionsuniversity.com
Time Decay Time decay, also known as theta, is defined as the rate by which an option's value erodes into expiration. The value of the option over parity to the stock is called extrinsic value.Since an option is a depreciating asset, meaning it has a limited life, the extrinsic value in the option w... Similar Editorial : Time Out by A. Raymond Randall, Jr.. | Source : Private Equity Investment
The Covered Call / Buy-Write Strategy For better or worse, most investors purchase stocks with the intent of holding their shares for an extended period of time.We do this mainly because the media and industry professionals have drilled into our heads, year after year, time after time, that it's best to buy and hold. The rece... Similar Editorial : Call Forwarding Redirect Call by Angela Hayden. | Source : Investment in Shares
Trading Naked Calls & Puts An option is a derivative trading product that is best used by investors as a hedging tool providing profit protection and profit enhancement. Although it is a powerful risk management tool, it can also be used effectively as a stand-alone trading vehicle.Under the proper conditions, optio... Similar Editorial : Conference Calls by Paul MacIver. | Source : Investment in Shares
How To Write Strategy The covered call strategy takes advantage of the fact that an option is a depreciating asset because its extrinsic value goes to zero at expiration. The process by which an options extrinsic value dissipates is called time decay... Similar Editorial : How To Write Strategy by Ron Lanieri. | Source : Advantages Of Investing In
Time Decay 50.You sell the calls at a .50 premium per contract which creates a 10.50 breakeven point. Remember, in a buy-write, the breakeven point is the strike price plus the option premium. Lets look at what our returns will be in each of the three scenarios... Similar Editorial : How To Write Strategy by Ron Lanieri. | Source : Trading The Stock Market
