Learn From Expert Traders at the Upcoming TradersExpo
On November 14, thousands of traders will come together for The International TradersExpo in Las Vegas. Featuring expert advice from more than 70 speakers, TradersExpo Vegas is the leading trading event of the season.
"I always looking forward to the people that I get to meet," said Anne-Marie Baiynd, the President and CEO of TheTradingBook.com. "What's really been great, I've been coaching for so long that I bump into people who go, 'You really did change my life. I really learned how to trade from you.' The longer I'm in the field, the more I meet people like that. That's really great for me."
During the event, Baiynd plans to speak on the benefits and challenges of trading weekly options. She said that investors typically use weekly options in the wrong way because they forget about one very important element, "and that is Theta, which is time erosion."
"Everything costs money, including Theta," said Baiynd. "If you take a look at a regular option chain, if the price stands still, how much will the option decrease in value over time? Now because a weekly option only lasts a week, it has a faster time decay."
Baiynd said that many investors buy an option and hold it overnight. "The price of the stock will move, and their option will decrease in price," she explained. "And they're like, 'Why is that happening?' And it's because they're not paying attention to time decay."
"The best way to use the weekly option is in a revenue-generating space," Baiynd continued. "[It] can be either speculative, meaning going long or short during the day, or [sold against] stock that you already own. For instance, if I have some Apple (NASDAQ: AAPL) stock and I have a weekly option, if I sell a call at $700 -- if I sell four of those, one right after the other, in a five-week space -- I will collect much more than if I just sell one monthly option."
Baiynd said that the time decay costs so much for investors to own that selling the option "often becomes a very lucrative thing to do."
"So all I'm talking about [at the expo] is, here's a tool, here's how it's misused, here's why people are afraid of it, and here's how you can help it work for you," said Baiynd. "So many folks play with the weekly option [because] it's cheap, and they can buy an Apple option for $2.50 today, but they don't understand how it erodes."
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