How Does 'Time Decay' (Theta) Affect an Option's Premium? ⎊ Path

How Does ‘Time Decay’ (Theta) Affect an Option’s Premium?

Time decay, measured by the Greek 'Theta,' is the reduction in an option's time value as its expiration date approaches. As time passes, the probability of the underlying asset moving favorably decreases, causing the option's premium to fall.

This decay accelerates significantly in the final weeks before expiration. Time decay is always negative for an option buyer and positive for an option seller.

What Is ‘Time Decay’ or ‘Theta’ in Options?

What Is “Time Decay” (Theta) and How Does It Affect an Options Buyer?

How Does Time Decay (Theta) Affect an ITM Option?

In Options, How Does the Concept of “Time Decay” (Theta) Relate to the Expiration Difference?

How Does Time Decay, or Theta, Affect the Value of an Options Contract?

Why Does Theta Accelerate as an Option Approaches Its Expiration Date?

How Does the ‘Time Value’ of an Option Decay as Expiration Approaches?

What Role Does Theta Play in the Decay of an Option’s Extrinsic Value?