How Does the Black-Scholes Model Incorporate Theta?

The Black-Scholes model, a theoretical options pricing model, includes a time variable (T) which represents the time to expiration. Theta is mathematically derived from the Black-Scholes formula as the partial derivative of the option price with respect to time.

The model shows that as T approaches zero, the option price approaches its intrinsic value, reflecting the effect of Theta decay.