InvestorQ : How do price and time have an impact on option selling and how to handle?
Bhavik Nehru made post

How do price and time have an impact on option selling and how to handle?

Answer
user profile image
Niraj Mehta answered.
2 years ago


This is the most critical thing to understand in selling options. When you sell options, time works in your favour as options are wasting assets and all OTM options tend to zero on expiry date. Option writers tend to prefer writing options in the beginning of the contract as it means higher time value and therefore higher premium. But that also means a higher risk of prices moving against you. It is this time / price trade-off that option selling is all about.