What Is the Role of ‘Time Decay’ or ‘Theta’ in the Pricing of Options on a Proof-of-Stake Cryptocurrency?

Time Decay, or Theta, is a negative factor that measures the rate at which an option's value erodes as it approaches its expiration date, all other factors remaining constant. This is a critical component of option pricing regardless of the underlying consensus mechanism.

As a PoS crypto option nears expiration, its extrinsic value diminishes because there is less time for the underlying asset's price to move favorably.