190  •   The Intelligent Option Investor
T enor Selection
In general, the rule for gaining exposure is to buy as long a tenor as is 
available. If a stock moves up faster than you expected, the option will still 
have time value left on it, and you can sell it to recoup the extra money you 
spent to buy the longer-tenor option. In addition, long-tenor options are 
usually proportionally less expensive than shorter-tenor ones. Y ou can see 
this through the following table. These ask prices are for call options on 
Google (GOOG) struck at whatever price was closest to the 50-delta mark 
for every tenor available.
Days to Expiration Ask Price Marginal Price/Day Delta
3 6.00 2.00 52
10 10.30 0.61 52
17 12.90 0.37 52
24 15.50 0.37 52
31 17.70 0.31 52
59 22.40 0.17 49
87 34.40 0.43 50
150 42.60 0.13 50
178 47.30 0.17 50
241 56.00 0.14 50
542 86.40 0.10 50
The “Marginal Price/Day” column is simply the extra that you pay to get 
the extra days on the contract. For example, the contract with three days left is 
$6.00. For seven more days of exposure, you pay a total of $4.30 extra, which 
works out to a per-day rate of $0.61. We see blips in the marginal price per 
day field as we go from 59 to 87 to 150 days, but these are just artifacts of data 
availability; the closest strikes did not have the same delta for each expiration.
The preceding chart, it turns out, is just the inverse of the rule we 
already learned in Chapter 3: “time value slips away fastest as we get closer 
to expiration. ” If time value slips away more quickly nearer expiration, it 
must mean that the time value nearer expiration is proportionally worth 
more than the time value further away from expiration. The preceding 
table simply illustrates this fact.