Not a financial adviser but to answer your questions:
1) Black-Scholes formula governs option prices: https://www.youtube.com/watch?v=pr-u4LCFYEY&feature=youtu.be
2) As an option approaches its expiration, its value goes down. The regular purpose of options is to "hedge" your position (i.e. "defend it"). If I'm a huge fund manager, and I buy a ten thousand shares of X at $100 each, it might make sense for me to pay a few hundred dollars for options that keep me from getting wiped out if X's price drops. For example, the option to sell at $80, even if X's price drops to $20.
3) ThetaGang has a podcast about what stocks to hold long term: https://podtail.com/en/podcast/theta-gang/episode-44-best-stocks-to-own/
The podcast host, Joonie, is more qualified than me. He posts all his trades (wins and losses) here: https://thetagang.com/joonie
Regarding the 1-2 day time span, there are a few styles of trading:
a. Day trading: buy and sell shares the same day
b. Swing trading: buy and sell over the period of a few days or weeks
c. Long-term investing: get married to a stock until a strong reason to sell comes up (Warren Buffet's "value investing")
Do your own research, but my thoughts:
a. I haven't figured out how to do this profitably, and I used my quarantine free time to spend a few weeks studying it.
b. Kind of what this article does with options instead of shares. One of the ThetaGang episodes says something about timing in this range, but I forgot the number. Let me know if you find it!
c. Warren Buffet says an index fund is best for most investors. Ramit Sethi would add that target-date retirement funds are also worth a look. They're like an index fund with a bonds component. The bonds portfolio percentage increases and the stock percentage decreases as you get closer to retirement. Keep in mind, these aren't immune to whole market crashes like COVID might cause.
Closing:
My philosophy is to treat options trading like buying video games. Instead of spending $240 on four Xbox games, I can spend it on something more intellectually-stimulating like trying strategies on the stock market. You wouldn't spend your life savings on Xbox games, so don't throw them at options either. The cool thing about this different type of game is that it can pay you back if you make a good move, but remember that there's someone (or an algorithm) on the other side of every trade playing against you.
