Short theta > long theta

Discussion in 'Options' started by wxytrader, Oct 23, 2024.

  1. I started a topic a while ago about how a short put is > a long put because it can make profits 4 different ways (up a little, up a lot, down a little, & sideways), when a long put can only make money 1 way. (Down a lot)

    Same goes for short calls > long calls.

    This video talks about it with examples using spreads.

     
  2. poopy

    poopy

    They are equivalent.
     
    nbbo likes this.
  3. We went over this last time LOL. No they are not. Yes, on a risk profile chart they will cancel each other out or whatever but they aren't the same probabilities of pnl.
     
  4. poopy

    poopy


    bullshit.
     
  5. poopy

    poopy

    Long theta earns from decay. Mom should have grilled you on theta.
     
    Sekiyo likes this.
  6. poopy

    poopy

    durrrr
    upload_2024-10-23_16-14-18.png
     
  7. poopy

    poopy

    You're exchanging hit rate for leverage. ATM discrete spreads (basis the synthetic) are equivalent risk. You harping on a deep otm short put being "better" than a deep otm long put is just rookie stuff.

    It's embarrassing. Stop these nonsense threads and they are derivative of other nonsense threads as you mentioned above.
     
  8. We aren't comparing the same thing. The only metric I'm interested in is probably of profit. A short put inherently has a higher probability of profit because time decay works in its favour ..so nothing has to happen to become profitable. Risk is irrelevant.
     
  9. poopy

    poopy


    That's why you're poor.

    Short theta, huh?
     
    cesfx likes this.
  10. Short premium as in positive theta lol...hey I just picked up #2 of my new additions!

    Anyway, I do realize you are correct on a level I'm not even comprehending really but I'm just pointing out that the video is saying the same thing.
     
    #10     Oct 23, 2024