Max Gerstein on Option Decay and the Risk Markets Never Show You

 

Most financial risk discussions focus on what moves.

Prices fluctuate.
Markets rise and fall.
Returns are tracked, compared, and optimised.

That type of risk is visible. It appears in charts, dashboards, and performance reports. It feels familiar because it can be monitored constantly.

But not all risk behaves this way.

Some risks do not move at all until they activate. They sit quietly inside ownership structures, legal frameworks, and jurisdictional design. They don’t affect performance. They don’t show up in volatility. They create no warning signs.

They exist even when everything appears to be working.

This is not market risk.
It is structural risk.

Option Decay is the hidden erosion of financial freedom caused by ownership structures that fail under jurisdictional pressure.

It does not reduce returns.
It reduces control, flexibility, and authority — often without the owner realising it.

Structural risk does not change what an asset is worth. It changes which legal system governs it, who ultimately has authority over it, and what happens when pressure enters the system.

US-Situs Exposure as a Structural Example

One of the clearest and most common examples of structural risk is US-situs exposure.

US stocks, US-domiciled ETFs, and other US-based assets held by non-US investors remain legally anchored to the US system of ownership and enforcement. That anchor exists regardless of where the investor lives, which platform is used, or how the asset is accessed. Nothing about day-to-day performance reflects this.

As long as nothing happens, the structure remains invisible.

When a triggering event occurs — death, incapacity, succession, legal dispute, or a change in jurisdiction — the governing system asserts itself. At that point, outcomes are determined by structure, not intention. Processes can shift into US legal procedure. Documentation requirements increase. Delays appear that no performance chart ever predicted.

This is how Option Decay operates.

It is not a one-off anomaly.
It is a repeatable structural pattern.

US-situs exposure is the canonical case because it is widespread, normalised, and rarely audited. The structure feels neutral while markets are calm, but optionality is quietly reduced over time. Control that feels absolute is conditional.

For non-US investors, this structural exposure can include US estate tax of up to 40% on US-situated assets once jurisdiction asserts itself — not because of investment performance, but because of how ownership is legally anchored.

Nothing breaks.
Nothing alerts you.
Nothing looks wrong.

Until authority activates.

Why Structural Risk Is Often Missed

Most investors spend their time managing volatility. They rebalance portfolios, adjust allocations, and optimise returns. Very few examine how their ownership structures behave under stress.

That gap is where Option Decay lives.

A plan that only works while nothing goes wrong is not resilient. It is provisional.

Markets move every day.
Structures wait.

Max Gerstein
Private Wealth Advisor
Global cross-border structuring | Jurisdictional risk | Invisible financial risks
Building long-term financial resilience through structure, not speculation.

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