What Is the Impact of ‘Theta’ (Time Decay) on Out-of-the-Money Crypto Options?

Theta measures the rate at which an option's value decreases as it approaches expiration. Out-of-the-money (OTM) options, which have little intrinsic value, are composed almost entirely of time value.

Therefore, OTM crypto options are highly susceptible to Theta decay, losing value rapidly, especially in the final weeks before expiration, making them a high-risk, high-reward proposition.