How Does the Concept of "Time Decay" (Theta) in Options Relate to the Urgency of a Trade during a Mempool Spike? ▴ Learn

How Does the Concept of “Time Decay” (Theta) in Options Relate to the Urgency of a Trade during a Mempool Spike?

Theta measures the rate at which an option's value erodes as time passes. Options traders are always racing against time decay.

During a mempool spike, the delay in transaction confirmation consumes valuable time, accelerating the negative effect of Theta on the option's premium. This forces the trader to bid an even higher fee to ensure immediate execution, as the financial cost of the delay (Theta loss) can quickly exceed the cost of the high fee.

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