Instead, I take the slow and steady wins the race approach to my investing and trading strategy.
And when trading an option selling strategy, this can always be a possibility, especially when I am dealing with Naked Puts. And for this right the investor will pay a cost, or premium, at which the seller feels is a fair value to exchange these contracts.
The value of the contract is what the markets are pricing the options at and are subject to change based on the supply and demand on that stock or option contract. Options Expiration Every option has a time and price associated with them and adjusts in price based on a number of underlying factors.
One of the factors is time decay, and it is based on how much time is left on the options. Typically, the value of a weekly call option is cheaper than that of a monthly all option. For example, a weekly option that is expiring on Friday of this week has 5 days of time value added to the options price.
Theta is the value of time in the options contract, and the longer the amount of time, the more time value an option will have. In general, we know that the week 100 strategy options tend to be extremely strong areas of support for a stock.
And looking at AAL, it appears to be acting in the same way.