Sell options long enough and the question comes up: why not sell further out where the credits are bigger? Jim Schultz says the mistake is looking at total credit instead of the rate of decay. A 90 day option collects more, but that premium has a much wider stretch of time to burn through, so it barely decays early on.
That is why the daily theta on longer dated options is smaller, and why the decay curve looks flat until expiration gets close. His sweet spot is around 45 days, roughly 30 to 60, where decay starts working for you without pushing so close that gamma and directional risk take over. This is education, not a recommendation.
š tastylive:
tastylive.com
š° Get Tom's pre-market analysis every morning:
tastylive.com/newsletters
š FREE Options Strategy Guide:
tinyurl.com/bp9ms763
š± Follow tastylive on X:
x.com/tastyliveshow
Chapters
00:00 Why not sell longer-dated options
00:41 Total decay vs rate of decay
02:05 Why the decay curve ...