Tackle Today: The Options Heuristics Series – Absolute Truth n.7
October 29, 2018
≈ Keep it in your pocket. ≈
And we are back with the last two Absolute Truths. This week we will be featuring numbers 7 and 8.
Absolute Truth n.7: Time is the option buyers worst enemy and the option sellers best ally.
Let’s stage the scene:
Think about some of your monthly expenses like rent and insurance (health, home, car etc.), for example. Month in, month out you incur in a debit. Month in, month out either the landlord or the insurance company incur in a credit. You are a buyer. They are sellers.
On the first day of the month, you have to pay. Thirty days later, guess what? You have to pay them again. So it’s like your contract is worth, say, $1,000 on the first day of the month and thirty days later it’s worth $0. Then you pay them again, again, and again. Time is against you, eroding the initial $1,000 into nothing.
Now stage the landlord or the insurance company. On the first day of the month, they sell you a contract that is worth, say, $1,000. Thirty days later it’s worth $0. Then they get paid again, again and again. Time is on their side, eroding the initial $1,000 into nothing.
You can download and print the flashcard HERE.
Chart of the Day
Absolute Truth n.7
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