How Can a Trader Profit from Time Decay?
A trader can profit from time decay by selling options (becoming a "seller" or "writer"). When an option is sold, the seller collects the premium, which includes the time value.
As the option approaches expiration, its time value decays due to Theta, allowing the seller to potentially buy the option back at a lower price or let it expire worthless, keeping the premium as profit.
Glossar
Profit from Time
Mechanism ⎊ Profit from time refers to the mechanism by which option sellers generate returns through the decay of an option's extrinsic value over time.
Profit from Time Decay
Theta ⎊ Profit from Time Decay represents a strategy predicated on the systematic exploitation of the temporal value erosion inherent in options contracts, particularly relevant within cryptocurrency derivatives markets.