3 Ways to Avoid Theta Decay When Buying Options - Professional Investor Reacts
Topics discussed
Introduction: Three ways to avoid theta decay
Defining theta decay and intrinsic vs extrinsic value
Overview of the five option Greeks
Calculating daily theta loss on Netflix options
Strategy 1: Buying deep in-the-money options
Why at-the-money options have the highest theta
Comparing theta decay across different strikes
Strategy 2: Buying options with further expiration
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The shape of the theta decay curve over time
Demonstrating lower theta with longer expirations
Backtesting results for optimal trade duration
Strategy 3: Using spreads to offset theta
Pros and cons of debit spreads vs long calls
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