Best options strategy to avoid time decay?

Discussion in 'Options' started by yalag, Mar 20, 2012.

  1. yalag


    What is the best options strategy to avoid time decay? I'm looking at things like a 1-2 years call options. Thanks!
  2. magicz


    use a calendar spread

  3. Buy deep ITM calls. Example:

    AAPL Jan 2014 240.00 calls
  4. You mean the bid/ask spread? I don't think it's "crazy", but we will have to wait till the market opens - Yahoo finance clears all that data around midnight EST.

    The 240 calls will move dollar for dollar to AAPL.
  5. Right.
  6. With a DITM call like this, it has a delta close to 1 so it should move like the stock but costs less, i.e. ~$36,000 for 1 call vs ~$60,000 for 100 shares of AAPL.
  7. Yes but was referring to the cost of the spread.
  8. moarla


    what about warrants? there are some without time decay.
  9. rew


    Since a warrant is basically a call option I don't see how it can avoid time decay. If I have a FOO warrant at a strike of $10, and FOO is currently at $5, the market will clearly pay more for the warrant if it expires in 3 years than if it expires in 2 months.
    #10     Mar 20, 2012