Sentences with phrase «value decay»

Time value decay and volatility are the two keys to my option income strategy and most strategies involving the sale of options.

It has always been the sign of «options noobs» to buy cheap out - of - the - money calls that have a large amount of time left, only to see their option values decay as time passes, while the market simply doesn't «shake up» enough to affect premiums to their advantage in any way.

The other consideration is to realize that an option's value decays quicker in the final 30 days of its life (as the seller, this is to your advantage), so you may want to write a series of short - term (one month) options instead of a single longer - term option, in order to maximize your time premium capture.

Move beyond simply buying calls and puts, and learn how to turn time - value decay into potential profits.

Downloadable Smart Trading Techniques: How to Profit from Time Value Decay Writing S&P 500 Credit Sp

Just bear in mind that it's a rare year where leveraged ETFs are actually positive at all on the year; they're often money losers on both the long and the inverse end since all leveraged ETFs go to zero given enough time from daily reset value decay.

I'm not saying you're not a «sophisticated investor» and I am, but I do want to emphasize the risk associated with leveraged ETFs so you're not surprised when the time value decay creeps up in your investment account later.

It's not just the prospect that magnified performance can also mean magnified losses, it's also the insidious value decay that occurs over time that sucks away value slowly, day by day.

The approach I took was to combine the leverage that options offer, the poor performance of leveraged ETFs over time (see more on ETF Decay), and the time value decay of both options and leveraged ETFs.

to demonstrate this further, the KBE cited above is up 20 % on the year while a 3X Financials FAS is up only 8 % due to this value decay.

It's value decay.

I always make it a point to highlight my disdain for leveraged ETFs as an «investment» since they tend to lose value over time regardless of the performance of the underlying benchmark given the value decay from daily rebalancing.

If you just model a 1X and 2X in excel over time, you'll see why the value decay occurs; it's simple mathematics.