Theta

Market Terms

We don't know everything about the markets.  We're just devoted to learners.  Taken from those smarter than ourselves, here's how we define Theta.

A part of a group of measurements known as the “Greeks” which are used in options pricing.  Also called the time decay of an option, theta is a measurement used to show the decline in value of an option due to the passage of time.  This means an option loses value over time as it moves closer to its maturity (presuming everything else is held constant).  The theta value is generally expressed as a negative number and can be understood to be the amount an options value declines every day.