Why Does Theta Decay Happen?
Theta decay explained — time value erosion, expiry week, buyer impact.
Quick Answer
Options are wasting assets. Theta = daily time value erosion. Accelerates into expiry, especially OTM.
When It Hurts
- Last 2 days weekly expiry
- OTM flat afternoons
- Post-IV crush
- Repeated same-day buys
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Frequently Asked Questions
- Should I act on this answer alone?
- Use it as immediate context, then confirm on the live option chain and OI tools before sizing a trade.
Key Takeaways
- Theta hits long options daily.
- Expiry week non-linear.
- Buyers need fast moves.
Related Articles
- Theta: Time Decay in OptionsTheta erodes option premium daily — the hidden cost of buying Nifty and Bank Nifty options, especially in expiry week.
- Time Decay in Options (Theta Effect)How options lose value as expiry approaches — acceleration on weekly Nifty contracts.
- Expiry Premium Decay — Theta on ThursdayWeekly expiry premium decay curve and buyer/seller implications.