Define the Term 'Theta' in Options Greeks ⎊ Path

Define the Term ‘Theta’ in Options Greeks.

Theta is the options Greek that measures the rate at which the time value of an option erodes as the option approaches expiration. It is often referred to as time decay.

Theta is typically a negative value for long option positions, indicating that the option's value decreases each day, all else being equal. It is one of the key components of the options pricing models.

What Is “Theta” and How Does It Measure Time decay’S Effect on an Option’s Value?

How Does the Time Decay (‘theta’) Affect the Value of an Option’s Premium?

How Does a Market Maker Use the Theta Greek to Estimate the Daily Decay of an Option’s Value?

Does the Limited Loss Apply to Both Call and Put Option Buyers?

What Does a ‘Negative Theta’ Imply for the Holding Cost of an Options Contract?

How Does the Concept of “Time Decay” (Theta) in Options Relate to the Duration of a Rally?

In Options Trading, How Is the Time-Value of an Option Similar to or Different from Cryptocurrency’s Time-Value?

Which Greek Measures the Rate of Time Decay?

Glossar

Theta

Decay ⎊ Theta, within cryptocurrency options and financial derivatives, quantifies the rate of extrinsic value loss as time passes, representing a critical component of options pricing models.