Option Theta Explained (Time Decay Visualized With Examples)

Thnx for the vid. You cover in detail how ATM contracts decay. However, for many traders we trade OTM and far OTM contracts and the Theta decay curves for those contracts is actually the inverse of the ATM curves, so this video can be very misleading because the OTM contracts actually lose value faster when beyond 30 days than when within 30 days.

Love from India Bro

Do you offer private mentorship?

How is theta value calculated?

All the Greeks seems linked one to the others.. as a move in one impact the value of the others.. a bit confusing for me 😅

Great video

Your examples of position theta are NOT realistic in assuming that a stock's price is not going to change over time...stock prices CHANGE.

Unless you are trading a very quick 0dte options contract the price of the stock price IS GOING TO CHANGE over time!

Lovely Video.. thanks for the learning!

Does theta decay throughout the day or just day by day?

If we hold over weekends how much Theta are we paying, one or three ?

So I had a question about theta. If I purchase an call option at 3pm before market closes does theta still take the full amount of theta?

the further the expiration date out, the slower the theta burn ?

Thank you for this. I really enjoy your method of teaching.

you keep talking about extrinsic value and not theta

When buying a debit spread would you say that you are eliminating time decay from your position since the negative and positive theta is washed out to nearly zero

The only video that actually explains this thoroughly. Thank you for this video it’s much appreciated

I fucking love you for all the option educational videos

Awesome thanks!

Thanks excellent explanation!

Contradiction contradiction contradiction
Theta is a variable in an equation since its rate moves faster closer when it approches strike price then at the start of the option
This is if you acknoledge your individual study

So the lower the number in theta decay the better?

Is the Decay effective hourly or just daily?

so i have a question....say i am buying a call option. if the stock price never hits the strike price and the option doesn't turn a profit by expiration, what happens to theta ? how is it calculated then?

Fantastic explanation of Theta ,I understood it thanks for information

Very helpful, thanks a lot brotha!

Greek here and very bullish on THETA

Completely new to options so probably a dumb question, but if a longer time threshold makes an option more valuable then why is the premium per day better on options with a sooner expiry date? For that matter, with this in mind why do most suggest monthlys over weeklys or even dailys? I did a calculation with a hand calculator and a scratch pad this morning on XLF, selecting ~.3 deltas along the way. If I annualized out the premium from puts from a 10 day expiry it was about 23% compared to a little over 13% based on monthly, which seems hardly worth it. If I did the 1 day SPY trade today for 5 days a week throughout the year at a .3 delta I'd annualize 38%. Meanwhile, the closest I can come to a .3 delta for a monthly expiry on SPY today is almost .4% and were I to annualize that I'd only earn 17%. What am I missing here?

You should multiply theta by 100 if you have 100 shares (standard size on Robinhood).

Very good information. Thank you!

Solid video! I just started options trading and I found a long ITM option (LEAPS) that had positive theta...also had 0 volume but a small number for open interest, 0.94 delta. This confounded me as I couldn't find any other examples of long options having pos. theta. Couldn't google an answer either.

Why did this happen? Did i just find a glitch in the matrix lol

Thank you so much. I love your videos. So now that we know the definitions of the Greeks, could you do a tutorial on how to apply this knowledge to a real life scenario? I get the definitions, but how do I use this information to make informed decisions?

This is a surgical strike on options😊 Could you please explain relationship of theta with strike price ?

Why does Theta change more when the option is ATM? Thanks for great videos.

Do you get buzzed before you film lmao? Either way I love your videos, always a great teacher!

Hands down the best. this dude really explains everything.

Hi
I have question, Is Theta decay Linear during the day ? and if not how do we measure the rate of change of Theta with time?

If you’re ATM with say 2 weeks left on your call and the stock price comes up, will you still receive the same exponential increase in profit as if it increased from day one or would it be significantly reduced since you’re closer to expiration, or would it be more since you’re so close to expiration and the specific stock typically isn’t very volatile so the implied volatility should be low(in this case).

Hey Chris. Love your educational videos. How do you create the data tables to show historic option prices. Is there a platform where I can see old option prices?

thank you for content !! it helps alot for someone new to options

Thanks brotha 🙌

With ATM in general, as expiration gets closer, Theta's absolute value is increasing. It means Theta is decreasing with the minus mark?

Fckn BBY HAS -1.96 theta that’s fcked up

Now, what exactly is the role of THETA token here and TFUEL? is it for payment? we can use other altcoins for payment. can anybody answer?

Fantastic explanation and visual examples of theta bro!

Great video. I would say it's more of an overview of ALL options basics as opposed to theta decay. It would be helpful to rename the title for those that just wanted that one particular piece of info

Hi Chris, today I repeat this VDO from you. My plan is to sell the put options ( out of the money) Do you have any VDO or material explain the Theta profile when to get in/out ? Thank a lot.

Another awesome VDO from you. I like the speed not too fast not too slow. Keep up great job! I am your fan.