Options Traders’ Edge: Most people got it wrong!

I did not get it till a long time after learning and trading Options, and unfortunately that meant I had been fighting an uphill battle and it is not difficult to know the outcome.
As with many things in life, we need to leverage on our strengths or advantages if we are to win. This is the same for military campaigns or businesses. Trading is no different.

Many uses Technical Analysis (TA) software or charts to give them a better probability of buying low and selling high. Others uses Fundamental Analysis (FA) to find good quality stocks that will work over long term.

Options Traders can employ both TA and FA as well (and I do), but many miss out on the most important natural edge Options gave to all of us.

With the correct understanding and application of that edge, many Options Traders like myself, spend only a little time, risk only a little money, suffer hardly any stress, but yet can generate consistent income.
Others might call it an unfair advantage. I just call it an edge I have over others who do not know. So, what is it?
Very simply, Options are decaying assets, where their values reduce over time! Options are contracts with expiration dates. Those nearing expiration will see their values diminish.
Let’s just have a very simple illustration using a company we are familiar with, Apple Inc, the company that made iPhones, iPads, Air Pods and more!

There are Options available on exchanges for people to buy Options on Apple stock. Without going into technical about Options, we can check out the value of $360 Calls Options (highlighted in the diagram below) at various time frames before they expire.

Data captured on 26 Jun 20. Highlighted are Option prices for $360 Call Options with 14 Days, 6 Days and 0 days to expiration.
They are worth $7.20, $3.90 and $0.01 respectively.
$360 Call Options with 14 days, 6 days and 0 days to expiration are worth $7.20, $3.90 and $0.01 respectively. Can you see that as the same Option approaches expiration, its value diminishes?
Unfortunately, only some could see but most failed to follow up to ask: who benefits when Options value reduce over time?

Even fewer asked: how can I make use of this fact to generate consistent income?

Without understanding the edge that Options present to us, and without having a system to take advantage of it, most Options Traders face uphill battles to achieve consistent profits.

I just conducted a Live Trading session on 10 Aug 20 with my students. I did not show them the theory. I showed them the reality of how I generate income easily and consistently by taking advantage of this edge. 15 min every evening is all I took.

They are on their way to do the same!
FG Options Logo_Final_Option A-3 copy 5

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