How does theta affect option buyers?

Option buyers face negative theta — the option loses value each day even if the underlying doesn't move. A theta of -0.05 means the option loses $0.05 per day.

Is theta constant over time?

No. Theta accelerates as expiration approaches, especially for ATM options. The last 30 days before expiry see the steepest time decay.

Black-Scholes Theta Calculator

Calculate option theta, the time decay of an option's value per calendar day. Theta is negative for long options, quantifying how much premium erodes daily as expiration approaches under the Black-Scholes framework.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate option theta, the time decay of an option's value per calendar day. Theta is negative for long options, quantifying how much premium erodes daily as expiration approaches under the Black-Scholes framework. Use the option theta result to inform your calculation.

Black-Scholes Theta Calculator

How to Use

Frequently Asked Questions

How does theta affect option buyers?

Is theta constant over time?