We are all subject to time decay and are bound on a path to our own personal expiration date.
Time is the one thing that we can never get more of.
You might deliberate endlessly on whether you should spend your hard earned money on something. But are you deliberate about how you spend your even more precious time? Money you can make more of, time is gone forever.
I am going to give a quick tutorial on options trading, as it is a field I am intimately familiar with and one that provides a very apt analogy.
Options are a bit like a lottery ticket in that they have specific expiration dates and ultimately can be worth nothing or quite a lot. But when you buy an option, you are essentially buying time for the underlying asset (options are derivatives of the underlying asset) to do something.
For example, let’s say that you love your Apple watch and iPhone and computer and you think the company stock is going to go back up to its recent high around $230. It is currently at $175. You think this is likely to happen over the next three months. So you go and buy a $200 call option for $150 or $1.50 x 100 shares for a standard option contract (these are all real prices right now).
You are buying time in this case. And, time decay is going to eat away at your option as we move closer to that June expiration date. If Apple is below $200 at that time, you will lose all the money you invested.
If you are correct in your hypothesis, and Apple is back around $230, you $200 call will be worth $3000, or $230 – $200 = $30 x 100 shares. That is a 1900% return. While many think of trading options as gambling, it is making an investment with a potential outcome. I find that investing money is better than spending it – on say, a fancier car, cigarettes, a bigger TV, more house than I need…
Our lives are decaying assets, just with an unknown expiration date. And we can decide whether we want to spend our time, or invest it. If I spend it playing a video game or watching mindless TV (and that includes most news these days) than I never get that time back and I very likely get nothing positive or long term out of it (no payoff). But if I spend it going for a walk in the woods, or working out, I get a variety of positive payoffs, including feeling better in the near term and having better long term mental and physical health.
Maybe it is time we start treating time like the most important resource we have and really looking at what we are doing with it.
Sled Rx 