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

Time decay, or Theta, is the rate at which an option's value erodes as its expiration date approaches. If a dead cat bounce lasts longer than expected, it can negatively affect a trader who bought short-term put options (bearish position) because the time decay will reduce the option's value faster than the price decline can increase it.