Actually it depends where you are in terms of moneyness, hence why “time decay” is a misnomer. Probably came about due to all the fotm calls retail buys...
Time decay only kicks in when the actual market movement is not as large as what is expected. When the actual market movement is larger than what was expected, time decay goes out the door and delta and gamma takes over. So don't blame it on time decay, blame it on the stupid implied volatility and the underlying movement.
Ok JSOP, thanks. If you are trading for a larger than expected market movement, what's the best way to trade options? ATM/ITM/OTM? Straight calls/puts? Duration? Let me give a scenario, maybe it helps: 1 - (Expected movement) Expect gold futures /GC to go down from 1900 to 1800, big 100 point move down 2 - (Expected time) Expect /GC to fully move from 1900 to 1800 within a 90 day period. 3 - (Expected oscillation) A more rapid oscillation of price as it broke down from key support. Not as many spikes up. Trading this /GC scenario via futures, if a short was held from 1900 to 1800 would yield $10k in profit. How would you trade this scenario via options intelligently and in a superior way to futures? Thanks
To which extent do you understand time value and why it is highest for ATM options? You may want to read these articles: Time Value Definition - https://www.investopedia.com/terms/t/timevalue.asp The Importance of Time Value in Options Trading - https://www.investopedia.com/articles/optioninvestor/02/021302.asp Time Decay - https://www.investopedia.com/terms/t/timedecay.asp