From Theory To Practice - August 31, 2021 - The Benefit of 45 DTE at Trade Entry

published 3 weeks ago by tastytrade, Inc.

Hang around tastytrade long enough, and you will inevitably see us entering our new positions at, or around, 45 DTE in the expiration cycle. The reason we like to enter new trades at this point in the cycle is that this is right around the time that the time decay curve is beginning to pick up steam. In other words, the extrinsic value within out-of-the-money options starts to decrease more quickly right around 45 DTE in the cycle. So by entering our new trades at this time, we’re positioning ourselves to benefit greatly from this added decay in the options.

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