Advanced Institutions Option Trading - Part 7

Time Decay (Theta) Strategies
Options lose value over time due to Theta Decay.

Strategies to Take Advantage of Theta:
Selling options (Covered Calls, Naked Puts)

Calendar Spreads

Iron Butterflies

Caution:
Theta decay accelerates as expiry nears. Option sellers must hedge their deltas to stay safe.

Risk Management in Options
Institutions and pro traders always focus on capital protection.

🔐 Techniques:
Position sizing (no more than 2-3% risk per trade)

Hedging with opposite legs or underlying

Stop-loss on premium or delta exposure

Use of Greeks for real-time adjustment

Risk management > Strategy in the long run.