The EDGE of premium decay

Discussion in 'Options' started by Trading Education Buyer, Dec 5, 2016.

  1. Last edited: Dec 5, 2016
  2. koolaid

    koolaid

    it's not a secret. all hedge funds use this strategy. If you want to be insurer of the markets...that's fine...just be ready to pay out once in a while.

    the majority of the time...markets do nothing. there is an inherent bias to short premium.
     

  3. It just what I want to do , payout and invest more at a much lower price.


    https://www.elitetrader.com/et/thre...dices-via-option-spreads-beats-buffet.302879/
     
  4. Buy1Sell2

    Buy1Sell2

    This is no edge whatsoever. You might think it is, but then the masses that do it think they have the edge as well. (They don't)
     
    CBC and JackRab like this.
  5. o_Oo_Oo_Oo_Oo_Oo_Oo_Oo_Oo_Oo_O
     
  6. JackRab

    JackRab

    Yeah, it's not an edge... it's a fact.... time decay is a fact... doesn't mean it always works out.
     
    Buy1Sell2 likes this.
  7. True ! But you can get someting close to an edge , if you appply it to stock indices .A true edge is present , before any trade is placed .Over a series of trades , rather than a single trade , it does become an edge.

    You need to learn advanced trading and rollover your losing position , that adds to your edge.There is an edge over a series of trades .

    Five fundamental truths:
    1. Anything can happen.
    2. You don’t need to know what is going to happen next in order to make money.
    3. There is a random distribution between wins and losses for any given set of variables that define an edge.
    4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
    5. Every moment in the market is unique.
    – Mark Douglas
     
    Last edited: Dec 5, 2016
  8. Doobs789

    Doobs789

    Bro, theta is not edge. The market is aware that time passes.
     
    #10     Dec 7, 2016