Death, Taxes, and Time Decay
Few things are certain in life. But as the old saying goes, there is nothing quite so certain as “death and taxes”. As an Options Trader, we would enthusiastically add option time decay to that list.
Options offer traders and investors more leverage and risk mitigation than just purchasing shares outright. For example, if we were to purchase 100 shares of a stock at $100 per share, our total capital outlay would be $10,000. Options give us the right to buy or sell at a certain price for a pre-determined length of time.
There’s a well-known quote from Warren Buffett – “If you don’t find a way to make money while you sleep, you will work until you die.” Buffett is also famous for being a seller — not a buyer — of option premium. Like Mr. Buffett, we too like to make money while we sleep.
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