How Time Decay Works in Favor of Option Sellers

During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Tobias discussed How Time Decay Works in Favor of Option Sellers. Here’s an excerpt from the episode:

You know, one thing I want options traders to be aware of is that, is that if you are selling kind of a longer term option, it’s you want to kind of expect for some of that return to be back weight. So time decay gets more rapid the last 30, 45 days of an option expiration. And so sometimes if you’re dealing like with January options and we’re in, what are we in now, June?

It’s hard to keep track nowadays. Then you’ll get a big benefit generally kind of in December and even early January. So it’s just things to keep in mind.

Time is a critical element with options. It’s working in your favour when you’re a seller of options, Toby. It’s working against you when you’re a buyer of options.