Investment risk

while we would never enter into any investment vehicle without knowing the chances for success, this is especially true with options. See the chafe with options is we can't hold them forever. We can't even hold them for three or four years like we can with stocks or bonds. Options are impacted by instance decay. Options contracts expire on the third Friday of every month and as our contracts get closer to expiration, instance decay becomes more of an issue. Look at it this way. Let's say you buy some August 50 calls in Coke when the stock is trading at $49. You requirement Coke stock to be above $50 on ending fellow to make money on this trade. The other problem with instance decay is that as ending fellow draws near and your option is sitting out-of-the-money more traders move to verify positions in the opposing contracts that are in-the-money, making it harder for you to make money. To counter this problem and place the probabilities on your side, you have to study statistical and implied volatility. Both of these can help options investors intend their venture and understand their desired options' chances for success. Beginning options traders requirement to understand instance decay in order to be successful.