How does time decay affect the value of options in the cryptocurrency market?

1 answers

• Dec 17, 2021 · 3 years ago
  Time decay is a critical factor that affects the value of options in the cryptocurrency market. As an option approaches its expiration date, its value decreases due to the diminishing time value. This is because the probability of the option being profitable decreases as time passes. Factors such as the volatility of the underlying cryptocurrency, interest rates, and the time remaining until expiration all play a role in time decay. Traders need to understand and account for time decay when trading options in the cryptocurrency market to make informed decisions and manage their risk effectively. It's a game-changer that can impact the overall profitability of their options trades.
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