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Understanding Time Decay Better: Single Options:

In General if I am LONG Options, I am Short Theta, time is against me- every min, hour, day, or week, I lose $$$ if I am LONG options

In General if I am SHORT Options, I am Long Theta, time is on my side- every min, hour, day or week, I make $$$ if I am Short Options Spread Options:

If I am LONG a Bull Call Spread, Am I LONG or SHORT Gamma?

-it depends:

Gamma and Theta Peak ATM and Closest to Expiration

FB is Trading $61.50 $50

- If I am LONG the FB Weekly 50-60 Bull Call Spread am I Long or Short Gamma???

- Long 50 Call, Short 60 Call? Short Gamma, bc Short ATM Option

- If I am LONG the FB Weekly 60-70 Bull Call Spread, am I LONG or Short Gamma?

- Long 60 Calls, Short 70 Calls? Long GAMMA, bc Long ATM Option Trader like to Sell OTM Put Spreads or OTM Call Spreads

- Always going to be Short Gamma, Long Theta and Short Vega

Gamma is the derivative of Delta, how much the Delta moves

CSCO is trading $22.50 The CSCO 22.50 Calls are 50 Delta

If CSCO moves from 22.50 to 23.50, does the Delta go up or down?

The delta on the CSCO 22.5 Calls are now 70, we now that our Gamma was 20. So, with this being said and Gamma and Theta peaks closest to ATM and closest to expiration

What has higher Premium Levels? AAPL or CSCO?

AAPL is going to have a higher Gamma, Theta, and Premium Levels than GE

CSCO is trading $22.50, $22.50 Weekly Straddle $.70 Gamma is going to be lower and Theta will be lower on a less volatile Stock

AAPL is trading $540, $540 Straddle is $10 Gamma is going to higher and Theta higher on a more volatile stock.

I was ALWAYS, Short GAMMA in GE. Short Options, LONG Theta, Time was on my side GE Position: Long 5000 Delta Short 5000 Gamma Theta: $750 a Day

Everyday that goes by and GE does NOT move at ALL, I make $750 in TIME Decay.

I would collect certain days and certain times of the day. Microhedge: AAPL is trading $540, and this Week Weekly ATM Straddle: $10.00 Long this Straddle: Wednesday at 9:00 or Wednesday at 2:30 PM. 80% of ALL Trading Days, are Trading Range Days (4 times per Week) 20% of ALL Trading Days, are Trending Days (1 day per Week)

- If a stock isn’t moving much during the day, would I rather be LONG or SHORT that Straddle.

If we are in a trading range day (80% of all days, I do NOT want to Buy Premium, would rather Sell PREMIUM)

Market Makers such as Citadel, Goldman Sachs, Timber Hill would do something called “Rolling their date forward’ daily between 1030-1200 AM CST.

If AAPL Straddle is Priced at $10.00 today and a Market Maker does NOT want to buy it, then they would price it on tomorrows date.

This tells us that between 830-1030 if the stock is NOT moving, we are better off SELLING options to collect more theta TIME DECAY HAPPENS: 1030-1200 This tells us between 1200-300 there might be better values bc market maker is still pricing on tomorrow’s price. As we Know a Trader can Roll their dates forward, so what happens over the weekend?

- The Best Market Makers were Always Short Gamma, and Long Theta

- I NEVER wanted to Buy Premium

- On Thursday & Friday would ROLL their dates forward for the Monthly and Next Week Options and they can “Roll” anywhere between 1-3 Days

- Days of the Week wise: Thursday Morning is the WORST time of the Week to BUY Options, Tuesday afternoon is the BEST time to Buy Options - Best Day and Time of the Week to SELL Options: Thursday morning, Worst time to SELL Options is Tuesday afternoon.

- FB is trading $61, FB Weekly 62 Calls are $.72-$.77

- Tuesday AM, at about 11 AM CST, I will “Roll my Date Forward” will decrease the price of the Option to $.67-$.72