Option Greeks
Theta (Θ)
The clock ticking against option buyers — how much value time decay strips out each day.
Definition
Theta measures how much an option's value falls per day purely due to the passage of time, holding everything else constant. It's the dollar (or point) cost of "renting" the option for another day.
Time value decays slowly at first, then accelerates sharply into expiry — that accelerating slope is theta.
Sign & behaviour
- Negative for long options (buyers lose value daily); positive for short options (sellers gain).
- Accelerates near expiry — time value decays fastest in the final days, especially for ATM options.
A quick example
A call worth 150 with a theta of −5 will, all else equal, be worth about 145 tomorrow simply from one day passing. Over a quiet weekend, several days of theta can stack up.
Why it matters
Theta is why buying options and waiting rarely works — you need the move to outrun decay. It's also why option sellers are effectively "long theta," collecting time decay as profit.
Measure theta on any option
TradePulse's Greeks calculator shows theta and how it accelerates as expiry approaches.