In Options Math For Traders we discuss five important phenomena in the option world, all of which can help or hurt your trade. They are:
The Volatility Risk Premium
Over time, options cost more than they're worth. This is a benefit to the option seller and a headwind for the option buyer.
Implied Volatility and Skew
Strike prices below at-the-money tend to display higher implied volatilities than strike prices that are above at-the-money. This is a benefit (headwind) to the put seller (buyer) and a headwind (benefit) to the call seller (buyer).
Time Value and Decay
Option prices don't erode in a straight line. Erosion accelerates as expiration nears. This helps sellers of short-dated options.
The Bid/Ask Spread
The bid/ask spread is very narrow in frequently traded options that are at-the-money or out-of-the-money. The bid/ask spread is wider, often much more so, for rarely traded options and deep in-the-money options.
Volatility Slope
Implied volatility tends to climb as a stock drops. This is helpful to the put buyer but a headwind for the call vertical spread seller.