Which Type of Option (Call or Put) Is Generally More Affected by Theta?
Generally, both call and put options are affected by Theta in a similar manner, as time decay applies to the time value component of both. However, in low interest rate environments, the difference is negligible.
For European options, the relationship is governed by put-call parity, which links the values and their respective Thetas.
Glossar
Time Value
Component ⎊ Time value, also known as extrinsic value, is a component of an option's premium that reflects the probability of the underlying asset's price moving favorably before the option expires.
Put Options
Premium ⎊ Put options, within cryptocurrency markets, represent a contractual obligation assumed by a seller to fulfill a buyer’s right to sell an underlying asset at a predetermined price on or before a specified date, functioning as a protective mechanism against downward price volatility.
Time Decay
Erosion ⎊ ⎊ Time decay, within cryptocurrency options and financial derivatives, represents the systematic reduction in an instrument’s extrinsic value as its expiration approaches.