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The Skinny on Options: Abstract Applications

Enter at 45 DTE, Exit at 21 DTE

The Skinny on Options: Abstract Applications

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Anyone new to the world of tastytrade might be surprised by some of our trading mechanics, specifically entering trades at 45 DTE and exiting trades at 21 DTE. But the reason why we choose 45 DTE to enter trades is that the slope of the theta decay curve begins to steepen at this point, which means the extrinsic value of our positions will decrease more rapidly. And by managing our positions at 21 DTE, we are able to not only mitigate the gamma risk of our positions, but significantly reduce our overall portfolio risk.

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