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Originally Posted by trader220
I don’t agree. Buying more time increases your risk since there is more premium to lose. Out of the money calls also drastically underperform the market for the reason I touched on above. If abc is trading at 100 and you buy the two month 110 call, say for two bucks, if the stock moves to 105 or 107 in a few weeks that call is probably going to be worth less than you paid. The implied volatility variable will go down as the stock moves higher and therefore the price of the call will severely underperform the market.
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If I trade options the contracts are held days to maybe a week so if time is bought there is minimal degradation. Out of the money allows me to buy more contracts. The option trades have been high cost fast moving stocks like apple or amazon. In and out quick money trades usually technical or event driven.
On stocks that are owned, the out of the money next months options are sold so it does not get called out then the option is bought back at a lower price. Sometimes, that can be done a couple of times a month. Over the year of dividends and selling options it adds up.
Everyone has their own style, this works consistently for me.