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The One Number That Tells You Which Option to Sell
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ticker lesson
Breakdown
0:00lesson
Theta decay in options trading
- Theta = options value decay per day
- Out-of-the-money options decay faster near expiration
- Directional bets on stock/market/volatility are avoided
- Focus on time decay as predictable profit source
2:20COMET· ticker
Comcast short put example
- Stock price = $23.50
- Short 23 put capital req = $423
- Buying power effect remains stable across expirations
- Theta return benchmark = 0.1% daily
4:57lesson
Theta return calculations
- 100 capital = 10 cents theta/day
- 20 trades = 2% daily return
- Portfolio theta offsets directional losses
- Consistent theta generates long-term returns
7:16COMET· ticker
Strike price adjustments
- 22 strike capital req = $233
- 21 strike theta = 20 cents/day
- Theta return = 0.1% of capital
- Portfolio becomes theta-generating machine
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