SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Covered Calls for Dummies Thread
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: BDR who wrote (412)5/3/2001 2:35:35 PM
From: Tom Chwojko-Frank  Read Replies (2) of 5205
 
Would it be fair to say the following:

Trading options is the transfer of three things.
1. Cash, in exchange for
2. Risk and
3. Volatility

Taking two extreme cases, if there is almost no time left in the option the trade is cash for volatility. If there is infinite time left in the option, the trade is cash for risk. Since options generally have some time left, the cash is split between the two.

So when you first sell a call, you are selling more risk and less volatility. As the time premium fades, you can buy back the volatility (and less risk).

Tom CF
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News