Theta

Term Explanation

Theta is a measure of an option's price sensitivity to time decay, representing the expected change in the option's price for a one-day decrease in the time to expiration. A negative theta value indicates that the option's price will decrease as time passes, all else being equal. This is particularly important for options sellers, as they can benefit from the time decay of options premiums if the underlying asset's price remains stable or moves in their favor.