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Investment
Theta
A Greek that measures how much an option’s value decreases every day as it gets closer to expiration.
Theta is the enemy of option buyers and the friend of option sellers. Time decay is why most options expire worthless. Traders who sell options love collecting theta every day.
It's the melting ice cube — every day that passes, your option loses a little bit of value just because time is running out.
Real world: An option with a theta of -0.08 loses £0.08 per day if the stock price and volatility stay the same. This effect gets stronger as expiration gets closer (time decay accelerates).
💡 Theta is the silent killer of long option positions — time is always working against the buyer.