The Inner Workings of Time Decay in Options Trading


After a steep decline and rapid rebound, the stock market seems to be settling in.  Following such a period of big moves and high volatility, I wouldn’t be surprised if it went nowhere for the next couple weeks, or until the next earnings period.

But, as an options trader, one thing’s for certain: Time never stands still. In trading options, the theta or time decay must be taken into account. Let’s take a look at how it works…

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