What Is Theta In Options? — 3 Amazing Facts About Time Decay in Options

What Is “Theta” In Options?

When you are BUYING options, time decay in options can suck the life out of you.

But when you are SELLING options, you should forget everything you learned about time decay, because now suddenly THETA is your best friend!

In this article, I’ll show you 3 amazing facts about time decay in options.

Let’s review: In my last article Short Selling Put Options, I talked about Option Premium. And we talked about “real value” and “time value.”

If you need a refresher on this concept, check out the last article that I did on “option premium.”

In a nutshell:

If an option is out of the money, then there’s no “real value” in this option, and the premium you see on your trading platform is only TIME value.

So let’s take a look at a very specific example. THIS is a trade that I currently have in my account: SPCE.

Right now, the stock is trading at 17.71.