Options Insider Awards: Product of the Year
What spurred the sudden interest? Well, On June 4, 2010 CBOE introduced weeklies on a bunch of ETFs and equities, and shortly thereafter it expanded their lifespan by a day. Now you can find them everywhere. CME. Eurex. ISE. They're everywhere.
What does this mean? Opportunity.
These supercharged options are not for the faint of heart, but do provide some tremendous potential.
One might expect that the longer the time to expiration the larger the time premium -- and you would be right. Longer dated options have greater extrinsic value than their shorter dated cousins. What is interesting about this feature of time decay is that it accelerates as time passes, so that an option that has 60 days to expiration might decay at a rate of $.03 per day, whereas an option with 7 days to expiration might decay at a rate of $.10 per day. In other words, a short term asset wastes away very quickly. In fact, weekly expiration options decay so fast you can actually see it.
So, congratulations weekly expiration options. You were a landslide winner in the first annual Options Insider product of the year awards."
View The Options Insider's post archive >