Positive cash flow income

The Option Selling generates positive income cash flow from portfolio in almost any market environment using one simple strategy - selling deep out of the money options.

"80% of options held through expiration will expire worthless "

Selling deep out of the money can improve those odds.

When selling an option, time value works for seller of option instead of buyer of option. When option is sold out of the money, the entire value of that option is in the time value. As time passes, all other things remaining constant, the option will gradually lose it value. It is this main reason Time Traders follows a strategy of selling deep out of the money option.

An option is considered a "wasting asset ". Time value erodes as each day passes, accelerating as the options expiration nears. This is known as time – decay. If underlying contract's price does not move to the option's strike price by expiration, the option will have no value and expire worthless. This is the concept on which Time Traders strategy is based.

Time Decay is truly a friend to writers of insurance. In fact, there are ways to profit from time decay. One of the most effective strategies that aim to have positive cash flow is insurance credit spread.

Code Trade Date Trade Value $ Closing Date P/L ROI% Status
NCM 22-03-2019 188.57 28-03-2019 188.57 0.74 Closed