From Theory To Practice - May 4, 2021 - Why We Prefer 45 DTE in Options

published 1 week ago by tastytrade, Inc.

If you spend enough time inside of the tastytrade world, you quickly learn that we prefer to initiate new trades at (or around) 45 DTE in the expiration cycle. This allows us to take advantage of the nonlinear nature of the decay curve over time, where the curve begins to steepen (options decay more quickly) right around 45 DTE. Therefore, by putting on new trades right at this point, we are better able to put ourselves into an advantageous position. As we look to put on a few new trades today in the June cycle with 45 DTE, we’re able to see this principle in action.

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