BEFRIEND THE TREND Short-term Options Trading Thread Message Board

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Strategies & Market Trends : BEFRIEND THE TREND Short-term Options Trading Thread

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Jan 9 4:00 PM EST

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To: TraderWithNoName who wrote (818)	2/14/2002 9:06:08 PM
From: Dr. Stoxx	Read Replies (4) of 4058

Philosophical Argument based on TWNN's "time value decay" study: Premise #1: an option's time value tends to diminish at about 50% per day for each day the option is held Premise #2: an option trader's hope for profit tends to increase at about 50% per day for each day the option is held Premise #3: the intrinsic value of an option tends to reflect the underlying asset's value in a ratio that baffles the average option trader Conclusion: THE AVERAGE OPTION TRADER WHO INTENDS TO HOLD NEAR-TERM OPTIONS FOR MORE THAN A COUPLE OF DAYS GETS SCREWED! TC

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