Time Decay: Can You Beat It?

Yo Pit Crazies,

 

I was thinking about how to beat time decay and Michael Jackson’s “Beat It” started running through my head.

 

Of course, you can defeat decay — and you can learn how it works with Volatility Edge and our eight-week VIX and VXX courses that are available to current members and new members who get today’s incredible Black Friday deal.

 

Plus, Option Pit has developed some helpers in this area …

 

Edge Hunter Helps Detect

 

The Edge Hunter series of sheets is designed to read market conditions and generate a trade based on Volatility Edge.

 

The four most accessible areas for a retail trader looking for vol edge are Realized Volatility, Skew, Forward Volatility and the VIX Futures Curve.

 

How does edge in the marketplace appear?

 

Simply put, dealers have to trade their inventory of options based on underlying price movements and paper (THAT IS YOU AND ME TRADING) supply and demand.

 

These two forces push volatility to extreme levels and that is where a savvy retail trader can pick an entry point.

 

Two Key Volatility Concepts are;

 

      • Arrested Decay:  The option is decaying slower than Black Scholes Model (BSM) predicts
      • Accelerated Decay:  The option is decaying faster that Black Scholes Model (BSM) predicts

 

The EH Butterfly sheet helps find Accelerated Decay and is very popular with our Pro Group.

 

VIDEO: Bill Griifo and I do a riff on skew and the EdgeHunter Butterfly Sheet here

 

To Your Trading Success,

AG

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