okay so this one is gonna be about uh expiration date and time Decay and specifically kind of how I play it uh let me just get that out of the way first whenever I buy uh an options contract I buy it like one to two months out that's my expiration date I think it says it right here yeah that gives me plenty of room to play it's not it's not always fast money I'm holding on to some of these for a long time and that's just something you're gonna have to be okay with because trading
options isn't always a fast game and usually the faster it is the more risky it is because fast money is never easy to make right so my expiration date set way out there and I can show you guys an example here let me get my my little marker so let's say you're right here okay that's the current date and this is your expiration date okay you set that two months out there's something called time decay all right that's right right here time Decay here's the definition basically your contract gets less valuable over time right and
it it's exponential as time goes on so basically here's here's the value of your options contract say it's like 100 bucks oh man it's rough so over time it's going you know it's going steady it's going steady maybe the price goes up a little bit whatever you know but so like price goes up you're making money you're making money but if you don't sell when you're up like right here over time this isn't going to matter because the closer you get to this expiration date it doesn't matter how much that this contract is worth it
doesn't matter if it went up like a thousand percent because no matter what it always expires worthless okay if you let it expire and you don't sell it is going to expire worthless that's just how it is right there zero a little sad guy well sad guy okay I don't know why I drew him his eyes were closed one second there we go I'll fix that now he looks angry all right okay anyway so yeah the the whole point of what I'm trying to make here is okay yeah you set your expiry out two months
but you really need to be selling within like whenever you bought it to like right here because within like the week leading up to the expiration date it's gonna nose dive I'm just going to keep nose diving until it's zero right right there zero um so that's a really simple concept really like just think of it like this you bought two months but in reality you probably only have like a month and two weeks so that's what you actually bought out was like a month or two weeks and even though it doesn't drop two weeks
ahead of time before expiration like that it's not quite that dramatic uh it is pretty quick it'll sneak up on you so just try to make something happen within like a month and two weeks or in the money option slash strike price okay this one's really simple I'll let you guys just read the article read this part whenever you get around to it for the example but a basic breakdown is the option has intrinsic value because the strike price is lower than the current price of the stock right so it's already valuable we like to
buy that okay and that's just personal preference you don't have to do it we just like to do it more that way um and those are just some of the ways that we like to do things all right that's that's me personal you guys don't have to but my my thing is in the money options I usually buy two months out but I'm actually selling within like a month and two weeks out that's that's my little strategy right there when it comes to just the analytical buying part you know there's obviously a lot more that
goes into it when you're just buying the option that's my setup
