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What is Theta (Θ)?
A time decay metric that shows how much an option's premium erodes with each passing day.
ExampleAn option with a theta of -0.05 lost $0.05 in value every day.The figures in the example illustrate the concept; they are not current market data.
Related terms
Delta (Δ)How much an option's price changes when the price of the underlying asset changes by one unit.Gamma (Γ)A second-order derivative metric that shows how much delta changes with the price of the underlying asset.Vega (ν)Shows how much an option's premium changes when the volatility of the underlying asset changes by 1%.Put OptionA derivative that gives the right to sell an asset at a predetermined price.
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Frequently asked questions
What is Theta (Θ)?
A time decay metric that shows how much an option's premium erodes with each passing day.
What is Theta (Θ) called in Turkish?
In Turkish financial reporting and news, Theta (Θ) is called Theta.
Which concepts are related to Theta (Θ)?
The concepts most often mentioned together with Theta (Θ) are Delta (Δ), Gamma (Γ) and Vega (ν).