Time Is Money

The expression “time is money” is one of the most important concepts in options trading. It is most relevant to those who either own an option or are planning to buy an option.

If you own an option, time is your enemy. You must keep in mind that the time value of your option will diminish, particularly during the last two to three weeks before expiration. If your option is out-of-the-money, you are especially vulnerable to a total loss of investment in the trade. Never hold an out-of-the-money option until the very end with only the faint hope that unforeseen circumstances will cause the stock to move favorably for you. An early exit from a few of these hopeless trades can salvage enough capital to fully finance a new trade. Forget ...

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