I had come across the term TIME DECAY OF OPTION.
It was a interesting concept.Actually with time the premium value decreases with time.It was interesting because almost 70 % of the times I had bought naked options ( put or call) the value eroded with time ( towards expiry) & it would become worth less.
So guys why not short sell out of money options near expiry week & mint money. Though the return are not so attractive as one would expect of the stock market but are relatively very safe & yearly returns would be 50 to 100 % .
There is also a emotional side also : -
Most of us may have encountered that when you buy out of money put / call at any price say -10,15,25,30...80,100 & so on & the underlying is not near the strike price the price diminishes to 20 - 05 paisa only infront of our eyes at expiry.
But now GUYS reverse your emotions short sell & as the price of option falls towards 5-10 paise near expiry you will be enjoying.
Thursday, July 30, 2009
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