Bigger Option Credits Aren't Always Better. Here's the Trap.

Sell options long enough and the question comes up: why not sell further out where the credits are bigger? Jim Schultz says the mistake is looking at total credit instead of the rate of decay. A 90 day option collects more, but that premium has a much wider stretch of time to burn through, so it barely decays early on. That is why the daily theta on longer dated options is smaller, and why the decay curve looks flat until expiration gets close. His sweet spot is around 45 days, roughly 30 to 60, where decay starts working for you without pushing so close that gamma and directional risk take over. This is education, not a recommendation. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 Why not sell longer-dated options 00:41 Total decay vs rate of decay 02:05 Why the decay curve looks flat 02:58 The 45-day sweet spot 03:43 Theta gimme, gamma gotcha 04:08 IWM example across cycles 06:06 McDonald's example confirms it #tastylive #optionstrading #theta #optionsselling #45dte #optionsdecay #shortpremium #jimschultz #calculatedrisk #optionseducation tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.