Tuesday, October 30, 2012

Benefits Of Deep In The Money Options

Regardless of what options you are buying, the deeper in the money the better. There are a couple of reasons why this is the case. One simple reason why is that  the time value attached to each option is lower for deeper in the money options. Another reason why is that it provides extra cover intrinsic value wise if the trade does not do what was planned.

Analysis of the recent trades at Trading Futures ETF Options blog has shown that one of the reasons for the sale of the option is due to its time value decay. Minimizing it by buying deeper in the money calls seems to be an appropriate action. Trades might be able to last longer and become more profitable if the time value did not decrease at such a high rate.



14 comments:

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Penny Stock Blog said...

I have never invested in options but I read that some of the tarp warrents issued when the tarp bailout happened a few years ago do not expire until 2018 they could be a great way to play a recovery of the large banks with a small amount of money.

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QUALITY STOCKS UNDER FIVE DOLLARS said...

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