Time decay — how much an option loses in value per day, holding all else equal.
Theta is negative for option buyers (you lose value daily) and positive for sellers (you collect daily). Accelerates as expiration approaches. Income strategies (covered calls, cash-secured puts, iron condors) profit from theta.
Time decay — how much an option loses in value per day, holding all else equal. Theta is negative for option buyers (you lose value daily) and positive for sellers (you collect daily). Accelerates as expiration approaches. Income strategies (covered calls, cash-secured puts, iron condors) profit from theta.
In derivatives, Theta is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
Theta is negative for option buyers (you lose value daily) and positive for sellers (you collect daily). Accelerates as expiration approaches.
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