Chapter 06 · Section 6.1

Time Decay

Which of the following statements are correct?

• a) Time decay helps your position at line A.
  No. Look at the profit/loss profile until line B. It looks like a long call. As the position moves toward expiration, it will lose time value. The most rapid time decay will be at line A.
  b) Time decay helps your position at line B.
  c) Time decay hurts your position at line A.
  d) Time decay hurts your position at line B.
  e) a and b
  f) b and c