What is the key concept highlighted in the adage 'Time is money' in the context of options trading?

Options trading is a quick way to make money The passage of time significantly influences option pricing Options trading requires a substantial time investment Timing the market is crucial for successful options trading

How does the likelihood of an option expiring 'in the money' (ITM) change as the time to expiry increases?

The likelihood of expiring ITM decreases The likelihood of expiring ITM remains constant The likelihood of expiring ITM increases The likelihood of expiring ITM is unpredictable

What are the two primary components that constitute the premium paid for an option?

Strike price and spot price Volatility and liquidity Time value and intrinsic value Risk premium and reward premium

What is Theta in options trading?

The rate of change in an option's price relative to the underlying asset's price The sensitivity of an option's price to changes in implied volatility The rate at which an option loses value as time passes The difference between an option's price and its intrinsic value

How does Theta impact option buyers and option sellers differently?

Theta has a positive impact on both option buyers and sellers Theta has a negative impact on option buyers and a positive impact on option sellers Theta has a positive impact on option buyers and a negative impact on option sellers Theta has a negligible impact on both option buyers and sellers

What is the relationship between time to expiry and the time value component of an option's premium?

Time value increases as time to expiry decreases Time value remains constant regardless of time to expiry Time value decreases as time to expiry decreases The relationship between time value and time to expiry is unpredictable

What is the key takeaway regarding the impact of time decay on options trading?

Options are a highly stable investment due to minimal time decay Time decay only affects options that are 'out of the money' (OTM) All options, both calls and puts, lose value as the expiration date approaches Time decay is irrelevant for options with high intrinsic value