To The Moon

Whether the market is open or closed, and whether the stock moves or not, an option’s time value decays every single day.

That’s the role of Theta. So how should buyers and sellers think about it?

📒 In The Options Handbook, the answer is pretty clear:

▶ Theta: The Silent Drain of Your Options

Theta can tell you how much value your options lose each day, simply due to the passage of time.

As the expiration date nears, Theta's impact increases, leading to quicker value erosion.

▶ Sellers

This favors options sellers. They usually prefer shorter-dated options, and the rapid time decay works to their advantage. It allows them to profit from the declining value of the options as expiration approaches.

All in all, Sellers can potentially gain without much movement in the underlying stock’s price.

▶ Buyers

Option buyers, however, face a different situation.

They depend on significant price movement before expiration to offset time decay (Theta), which can erode value even if the option seemed promising at first.

▶ Key Takeaway⚠️

No matter which side you’re on, always keep an eye on Theta! Monitor how time value changes, and if needed, adjust early—by closing out or rolling to a later contract.

🎁 Want more insights like this? The Options Handbook also dives deeper into the other Greeks—helping you build a full picture of how options really work! Now available in the Tiger Coin Center!

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