Change ), You are commenting using your Google account. So the strikes with the most theta lose the most theta each day. They have expiration dates. Time decay always work against buyers and benefits writers of options. Time decay is a measure of the rate of decline in the value of an options contract due to the passage of time. Theta, as it relates to options trading, represents the amount of premium lost per day as an option moves toward expiration. Time decay is a well known phenomena in options trading where the value of options reduces over time even though the underlying stock remains stagnant. However, the Theta for this strategy will most likely be positive as the shorted dated options will have a higher rate of decay than the longer dated expiry. In general, the higher the implied volatility levels, the higher the Theta amount. An option contract with Options Theta of -0.012 will lose $0.012 every day even on weekends and market holidays. High risk = high gains. I know theta is a mathematical model and not a mechanical formula that can be applied in real-world. You've probably heard the saying that options are a wasting asset -- wasting in that, with each day that passes a small amount of time value ticks away. Of the infamous trading "Greeks," theta might be the most relevant to the tastytrade community. Time decay occurs because the extrinsic value, which is also known as the Time Value, of options diminishes as expiration draws nearer. Of course, it is not as simple as opening a position and waiting for the profits to accumulate. Option Decay. Since the time remaining on an option can never increase, time decay is a one-way street. Now, theta decay, I don't want this to be a big lecture on theta decay, but theta decay does go in a exponential curve and whatnot, and we can cover that in a later bit.