FOUNDRY · TITAN PROTECT
Options Mastery Series — Article 6 of 10
What You will Learn:
- What theta measures and how time decay works
- Why options lose value as expiration approaches
- The theta acceleration curve
- When to buy time vs sell time
- Managing theta in your positions
Video coming soon — Subscribe to @Titan_Protect for the full breakdown.
The Inevitable Decline
Time is the one guaranteed factor in options trading. Every day, time value bleeds out of options. Theta measures that bleeding. Understanding theta means understanding the clock that ticks against every option buyer.
What Is Theta?
Theta measures how much an option loses in value each day due to time decay.
Key facts:
- Theta is always negative for long options (you lose value)
- Theta is positive for short options (you gain value)
- Measured in dollars per day
- Accelerates near expiration
The Theta Curve
Time decay is not linear:
- 90 DTE: Slow, steady decay
- 30 DTE: Decay accelerates
- 14 DTE: Decay becomes noticeable
- 7 DTE: Decay accelerates sharply
- 1-3 DTE: Maximum decay (theta explosion)
Buying vs Selling Time
Buyers:
- Pay for time
- Need the stock to move faster than theta decays
- Prefer shorter-dated options (less time premium)
- Must be right on direction AND timing
Sellers:
- Collect time premium
- Profit if stock stays still or moves slowly
- Prefer shorter-dated options (faster theta)
- Have time working for them
Key Takeaways
- Theta = daily time decay
- Decays faster near expiration
- ATM options have highest theta
- Buyers fight theta, sellers collect theta
- More time = more expensive but slower decay rate
- Less time = cheaper but faster decay rate
Coming Next: Gamma and Delta Exposure Combined
Learn portfolio-level Greek analysis for understanding total market maker exposure.
© 2025 Titan Protect. Educational content for traders. Not financial advice.
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