Duration is your hedge

The high cost to carry a long volatility position is one of the decay factors used by shorts to generate profits. Looking at a long term chart makes it obvious that the longer you hold a short, the higher the probability of profit.

UVXY Log Style Chart since inception
UVXY Log Style Chart since inception

This decay serves as a backstop by product design, helping to ensure profits if you have enough time in your trade.

Vertical spreads are great examples for this. A spread with less than a week until expiration will pose much more risk than one made with LEAPS. Of course the market knows this too so the ROI of a spread with an ATM short leg, will be much higher for the shorter dated spread than the longer dated.

You can use this reality for other positioning as well. How about a naked Call? If tested you can keep rolling, thus grabbing more time for your trade to work. Of course you need to be mindful of how far you let an undefined risk position move against you, but adding time to this trade can be the difference between profits and losses.

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