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What Is the Risk Associated with Short-Term Options Due to High Theta?

The risk is rapid premium erosion; if the underlying asset is slow to move, high Theta quickly destroys the option's value.
Greeks.Live05.11.25

What Is the Risk Associated with Short-Term Options Due to High Theta?

Short-term options carry high Theta risk because their time value decays at an accelerated rate. If the underlying asset does not move favorably quickly, the option's premium can rapidly erode, leading to significant losses for the buyer.

This high Theta makes short-term options highly speculative and unforgiving to slow price action.

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