Give Yourself Time to be Right

Option buyers often complain that they never make as much money as they should. This may be true, but the reason isn't because the pros have conspired against them; it's because they've stacked the odds against themselves!

One of the biggest mistakes options traders make is they don't give themselves enough time to be right with a trade. Options as a wasting asset -- not perpetual investment instruments like stocks. The closer you get to expiration, the faster the option price decays.

Option buyers who find they are frequent losers have stacked the odds against themselves by buying near-term options that give them too little time to be right. In most situations -- unlike the previous example -- I recommend giving yourself 30 days or more to allow an option play to work in your favor.

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