Held options for 3 weeks and noticed they lost value despite the stock price being stable.
Invested $300 in calls expiring next month, but now they are worth about $180.
Is this typical time decay reduing the premium? It’s frustrating to see potential gains slip away.
Options lose value over time, even with stable stock prices. That $120 drop in your position is typical due to theta decay. For future trades, aim for options with 60 to 90 days until expiration. This allows for better management of time decay. Holding options too close to expiration increases the risk of losing value quickly. It’s best to be sure of your strategy before holding options for weeks.
Theta killed my Apple calls last year the exact same way. Bought them 30 days out and watched $400 turn into $150 while the stock barely moved.
Now I either sell within the first week or buy options with 60+ days to expiration. That extra time buffer saved me from similar pain trades.
Theta decay accelerates as expiration approaches. Options lose approximately 1/3 of time value in final month. $120 loss on $300 position equals 40% decay - standard for 3-week hold.
That $120 loss is a common experience with options nearing expiration. As the expiry date approaches, theta can significantly impact your premium.
In my experience, many traders choose to exit their positions within a couple of weeks or prefer options that have a longer time frame. Weekly options can be profitable, but they are quite volatile in both directions.
Consider cutting your losses at 50% instead of waiting it out.
Time decay can really eat into options. Same thing happened to me with calls.