How to See Time Decay in Action (Without Risking a Single Penny)

Hey traders,

Yesterday, I told you why selling options is the smart play — because time decay is your best friend. Today, I want to show you a simple way you can actually see time decay at work.

It’s an easy, no-risk exercise you can do from the comfort of your own home. You don’t need to place a single trade, and you don’t need to spend a dime. But by the time you’re done, you’ll have a much better understanding of how time decay works in your favor as an option seller.

Here’s How to Prove It to Yourself

Step 1: Pick a strongly trending stock like CL or AVB.

Step 2: Find an at-the-money put option that expires in a week or two. This means the strike price of the option should be equal to or close to the current price of the stock. Take note of the last price it sold at.

Step 3: Watch that option over the next few days. Check it daily and take note of how the price changes, even — and especially — if the stock itself doesn’t move much.

Now, if the underlying stock moves sideways, what you’ll see is the option value slowly ticking down every day — that’s time decay in action.

I’ve done this many times over the years, and I’ll tell you, it never gets old.

One time, I was watching an option worth $1 on a Monday, and by Friday, it had dropped to zero — not because the stock did anything crazy, but because the clock was ticking and it the option was looking more and more like it would expire out-of-the-money.

Why This Matters

Here’s why this exercise is so important: It’s proof that, as an options buyer, time decay is your worst enemy.

But as an options seller? That decay is like money dropping into your pocket every day the stock doesn’t move.

This is the kind of thing that flipped my entire approach to trading on its head.

Once I realized I didn’t need the stock to make a big move to win, I started selling options instead of buying them — and I’ve been doing it for decades now.

The Lesson

Before you put any of your own money at risk, take a few days to watch an option expire worthless. It’s eye-opening, to say the least.

Do this exercise, see time decay in action for yourself, and you’ll understand why selling options is one of the smartest, most consistent ways to make money in the markets.

Trade well,

Jack Carter

P.S. Did you catch Nate Tucci’s plan to harness Fed-day volatility? If not, you need to see this!

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