Option Greeks

Theta

The Option Greek measuring time decay — how much value an option loses each day simply because less time remains until expiry.

Theta measures time decay — how much value an option loses each day, all else being equal, simply because less time remains until expiry. Time decay generally works against Option buyers and in favor of Option sellers.

Decay Isn’t Constant

Time decay accelerates as expiry approaches, especially in the final 2-4 weeks of an option’s life — the same option typically loses value faster near expiry than it did earlier in its life. ATM options generally experience the highest absolute Theta decay.

See the full deep-dive lesson, with a worked decay example, in Theta Explained: How Time Decay Affects Options.