Chapter 06 · Section 6.1

2:1 Spread Ratio

This is a 2:1 backspread 45 days before expiration.

As this position moves toward expiration, the effect of time will:

a) hurt your position.
• b) help your position.
  No. While this is true for the short option position alone, the value of the long options position is substantially decreased by time decay.
  c) both hurt and help your position.