Chapter 06 · Section 6.1
Out-of-the-Money
The more an option is out-of-the-money, the greater the risk to a long position holder. It can also be said that for a long option position holder, risk is greater:
a) the longer the time remaining to expiration.
b) the shorter the time remaining to expiration.
The longer the time to expiration, the greater the opportunity for the option to be profitable. It is more likely the spot market will move in your favor if you have 8 months to expiration than if you only have 2 months.