What is a time disintegration?

Time decomposition concerns the process that takes place when the value or possibility of the decline period. This change in the price of the option is usually credited by an identifiable set of circumstances and is just before the end of life. Investors tend to look for grades that there is a time of time. Accurate measurement of incidence and time disintegration allows you to take steps towards a corresponding way.

It is not uncommon that the possibility will work very well for most of your life, but it will start to move slightly at one or two months before reaching the expiration date. Many investors understand this and do not see it as a reason for alarm. This option often undergoes a short decline period, then gather at the end of the period. However, if the decline continues, there is a possibility in a state of time disintegration and the investor must determine whether to sell this possibility.

Knowledge of the right time for sale, when time occurs, may be obvious. Too often, investors decide to keep a little longer than necessary and eyeThey kiss that the decline will be equal. One of the best ways to correctly identify the time disintegration and sell the possibility before the erosion of price decreases to the return on investment is to look at the reasons for the price drop. If the basic causes of the decline are caused by circumstances that are likely to remain on the spot, the investor will be sold as soon as possible.

It is important to realize that the main risk with time decay has to do with long options. Attention to the performance of the last thirty to forty -five days is essential to avoid loss with the possibility. At the same time, there may be a short option that is affected by time decomposition, a very good thing for the investor. In fact, a decrease in the value of the related lonmation G could in fact help to increase the price of options for short options and increase the investment more profitable than it would be otherwise.