Theta Positive Options positions are those which benefit as a result of Theta (i.e. time decay).
Strategies which are either net Short (i.e. more contracts sold than purchased) or have a Short bias as a result of more Short contracts that are closer to the money (e.g. credit Spreads) are Theta positive.
Contributed by: Ralph Windsor
Strategies which are either net Short (i.e. more contracts sold than purchased) or have a Short bias as a result of more Short contracts that are closer to the money (e.g. credit Spreads) are Theta positive.
Related Directory Entries
Featured Video View All
Positive Theta
A video on how being long an option spread can gain positive theta
External Links
http://www.moneyshow.com/articles.asp?aid=optionsidea-22696Option Traders: Don’t Trust Theta!
An article by Mark Sebastian which notes that theta values (and options pricing models in general) can lose their predictive accuracy as options approach expiry.
Comments
There are currently no comments for this term.
Post a Comment
You must be registered and logged in to post a comment.