The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about how time to expiration affects option prices. It should come as no surprise, but in the world of options trading and specifically with option pricing, the more time a contract has until expiration, all things being equal, the more valuable the option contract is going to be and this means that option contracts that are six months out from their expiration date are more valuable than the same option contract, same strike price, same side of the option contract chain that are three months out as they are to option contracts that are one week out or even a day out. Time is worth something. It’s worth a lot of money in the world of trading because the more time you have for the position to move in the direction that you want it to go, the more valuable that option contract is and the more that an option buyer will pay a premium to get additional time. Now, as an option seller, we gene