@optionsdad.sg: The stock doesn’t need to make a big upward move for a put seller to potentially profit. That was one thing that attracted me to selling puts. Time passing can help. But it doesn’t work in isolation. I recently sold a put on CMG (Chipotle) as part of my $10K Portfolio Journey. Even as time passed, the option became more expensive to buy back when the share price fell. That’s where theta comes in. Theta estimates how much an option’s price may change as one day passes, assuming the other pricing factors stay unchanged. So if an option shows a theta of −0.05, that’s roughly $0.05 per share, or about $5 for one standard 100-share contract, of estimated theoretical decay over one day. But that does not mean I receive another $5 in cash every day. Because in a real trade: The stock price moves. Implied volatility changes. Theta itself changes too. A falling stock price can increase the value of a put. Rising IV can also make the option more expensive. And those moves can outweigh the benefit of time decay. Personally, I don’t use theta to decide whether I should enter a trade. I still start with: Do I want the stock? Am I comfortable with the strike? Can I accept assignment? Time decay can help a trade. It cannot make an unsuitable trade suitable. Save this for the next time you see theta in your options chain. STOCK FIRST. PREMIUM SECOND. #optionstrading #cashsecuredputs #sgfinance #sgparents #stockmarket

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2026-09-24 02:29:31

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