Losing Money From Options Decay

- Change option criteria to ITM options

- Change options criteria to further out days to expire

- Use complex options strategies such as credit spreads or debit spreads

- Adjust stop criteria to exit a position before a specific time period

Assume you have a swing trading strategy where most of your trades last 7-10 days. With Pheemu, you recognize that most of your trades areworking out, yet you’re still losing money. Here’s how we suggest fixing this issue:

1. Use ITM Options

In the money options have less decay than out of the money options. Going deeper in the money will ultimately cause your options to decay less

2. Increase the expiration

Getting options that expire further out also have less decay. Getting more time on your options will give yourself more time to let the trade work

3. Use Complex Options Strategies

Involving credit or debit spreads will help with time decay. Credit spreads and iron condors even take advantage of time. Try implementing different options strategies to use decay to your advantage

4. Adjust stop loss criteria

If your swing trades typically last 7-10 days, try adding in a new rule for your stop loss criteria. Something like: If the stock hasn’t moved in my favor to x level by day 4, get out of the position. Utilizing time in your entry or stop loss criteria can help fix this issue