Newbie: Why can't I just short call options and win with the decay?
I'm a complete beginner to options, so shoot me down if I'm just being stupid.
As question above indicates. Surely I can just short extremely out-of-the-money options to the point that they start at like $0.02 and go to $0.000001. I understand that if the underlying stock goes against me, I can begin to lose.
But say I set my strike price 10 or 20% above on a short-term option, surely the chances of me making 100% on my money due to decay is much higher than the chances of me losing?
Thanks
Don’t know much about options, but sounds like picking up pennies in front of a steamroller if I’m reading this correctly
You're underestimating the extreme amount of risk you're taking on: gamma is going to destroy you at some point
#thetagang
peso problem. You’ll make small wins as options mostly expire otm; however, you’ll lose big eventually if an option expires ITM. It might help to think of delta as probability of expiring ITM
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