Explain the Inverse Relationship between Theta and Gamma ⎊ Path

Explain the Inverse Relationship between Theta and Gamma.

Theta and Gamma generally have an inverse relationship. When an option has high Gamma (meaning its Delta changes rapidly, typically near ATM and short-dated), it also tends to have high Theta (rapid time decay).

Conversely, deep ITM or far OTM options have low Gamma and low Theta. This inverse relationship is a key concept in option theory, often summarized as "you cannot have both high Gamma and low Theta."

How Is Funding Rate Calculated and Who Pays It in a Perpetual Swap?

Is Roll Risk Higher for Short-Dated or Long-Dated Contracts?

Why Do Options with Very Short Time to Expiration Generally Have Higher Gamma near ATM?

Is the Funding Rate Paid Directly to the Exchange?

What Is the Relationship between Theta and Gamma?

How Does an Option’s Gamma Affect Its Theta Value?

How Do Arbitrageurs Use the Funding Rate to Profit in the Perpetual Swap Market?

Why Is Gamma Highest for ATM Options?