Many of our go-to strategies profit from the passage of time paired with little to no movement in the underlying market. This phenomenon is known as, whereby an options strategy such as loses value as time passes if nothing has occurred in the underlying market.
Today’scenters around the idea of time decay being dynamic and what that means for a theta position relative to: time, , and binary events.
Tom and Tony tackle these dynamics from both the practical and the theoretical. They compare options prices and real theta values in the current market over; also, they talk through the theoretical component of options tending to increase in the amount by which their value decreases as expiration approaches.
Before wrapping up the show, the guys go through a recent earnings play in LULU and how binary events and time decay strategies do not mix. Check out the above content for more information regarding time decay and how it changes.