Im testing to see if option strategy can minimize the time decay of simply buying call/put under all cercumstances. Basically option to have limited lose and unlimited upside with few months of time frame, that will take care of the time decay issue of single option.
Buy a 90 day DTE or more ATM. Within 45-60 DTE, roll it out back to a new 90 Day ATM or more. Also applies to making unwieldly, humongous futures contracts more manageable akin to deleveraging.
I would go with the weekly options 7 days out or less. That way you are forced out of a bad trade quicker and you can then plan the next trade. Buying that extra time of a few months is just a crutch to lean on and hoping a bad trade will turn around so you can get your money back.
His objective is to minimize time decay while holding a position over several months. You are telling him to hold a position when time decay is at its greatest. If you know your going to be in for the long haul, it's best to use the right product and not generate anymore transaction fees and slippage. Additionally, You can't turn him into a swing trader if the guy's style is more of an investing mindset.
I don't think he understands the physiological part of a trade 2 months or more in duration. If the position goes red early it is tough to cut the loss because there is hope that it will turn around, then the main objective becomes just breaking even. With a shorter time to expiry you do not pay for that extra time decay/hope.
Markets are fractal. Everything that happens in one time frame can happen at relatively the same order of magnitude in another. I am not even going into a discussion about the relativity in options positions. Note: I stayed away from the your thread about greeks for a very good reason. To keep my sanity. Now, I'm starting to believe that really is such a thing as time decay. I'm out.
You are right, that would accomplish what he's asking, but that would be a terrible strategy since you're giving up the prime risk reward time period for time decay. That 25-45 day time period (roughly speaking of course) is the ideal time to be trading. By opening longer term positions like 90 days out, and then rolling them out to new long term positions before it gets any significant decay just means you are taking on a lot of directional exposure without offsetting it with enough time decay to make it worth the risk. From a risk reward perspective, you've structured a terrible balance. Rolling out to avoid excessive nearer expiry time decay is fine, but you'd want to do it at shorter intervals. Opening 50 or so days out and rolling around 25 or 30 days. Trading the 90 - 45 day window would be a recipe for disaster in the long run.
short term, deep ITM option, Delta of 80, most intrinsic value.. mostly a directional bet. but costly/
I thought since he was long he wanted as little time decay as possible? I don't understand this. I appreciate it if you can explain since I do many trades within this time period and if this is true I better not do it in the future. Is this still true for someone long options?