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Mar 22, 2023
managing at 21 DTE
Many options traders manage their trades at 21 DTE (Days to Expiration) because it is considered the optimal time to adjust or close a trade. At this point, options contracts have lost much of their time value, and the premium decay rate accelerates. This means that the price of the options contract will start to decrease at a faster rate, which can be beneficial for traders who are looking to buy back the options contract at a lower price or sell options premiums at a higher price.
Additionally, at 21 DTE, there is still enough time for traders to adjust their positions if the underlying asset's price moves in an unfavorable direction. This allows traders to manage risk and avoid taking on significant losses.
It's important to note that managing trades at 21 DTE is not a hard and fast rule, and traders may choose to adjust or close their positions at different times depending on their individual trading strategies and market conditions.