Most investors and traders new to options markets prefer to buy calls and puts because of their limited risk and unlimited profit potential. Buying puts or calls is typically a way for investors and traders yow speculate with only a fraction of their capital. But these straight option buyers miss many of the best features of stock and commodity options - such as the opportunity to turn time-value decay into potential profits.Tutorial: Options BasicsWhen they establish a position, option sellers collect time-value premiums, paid by option buyers.
You might have had success beating the market by trading putt using a disciplined process that calcukate a nice move either up or down. Many traders have also gained the confidence to make money in the stock market by identifying one or two good stocks that may make calcklate big move soon. Only in-the-money options have intrinsic value. There are more factors influencing time value of an option. This article deals with the last factor mentioned. Risk-free rate:The current risk free rate of return.