I know from 60DTE on, the theta and Vega start to significantly reduce.
I’m trying to figure out how much intrinsic is needed at expiry to yield more profit than 60+ days out when there’s still ample extrinsic.
I’ll ask in an example: is it more profitable to sell an OTM call option when it’s ATM with 90 days DTE, or when it’s deep ITM with 1DTE?
Thank you!
Fundamentally, is it better to sell a call option before expiry?
byu/New-Gas3080 inoptions
Posted by New-Gas3080
1 Comment
There’s no ‘right’ answer for that. If the underlying is moving up faster than theta is cutting the option price, you want to ride that up. If those two start to cancel each other out, you probably want to roll to something that still has room to go up.