I like looking at lose pron from time to time. But, never understood how people lose money due to time decay in options.
In: Economics
The closer you get to the expiration date, the less people will be willing to pay for the contract. Case in point: current price of a stock is $25/share. You have two contracts with a price of $30/share. One expires in a month, the other expires in two days. The one that’s still a month out is more valuable, since there’s more time for the stock price to pass that $30 mark.
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