Capturing Theta

Trading Strategy to profit from Options Theta Decay


Where is the Risk:


In all 3 examples of market movement the strategy makes money. Does that sound a little too good to be true? Every investment strategy involves risk. The risk in Theta Plus comes in the Sideways Market Movement.

In our efforts to protect theta, we experience frequent buying and selling in the underlying while the market is trading near our strike price. The risk is that this trading back and forth will cost us more than the premium we collected on our options positions. Therefore the two most important things to maximize profits are your Pivot Point strategy to protect theta, and your money management technique.

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