what is theta 
theta the greek letter is used to name an options risk factor concerning how fast there is a decline in the value of an option over time this is also known as an option s time decay as an option gets closer to maturity or the contract s end it loses value as long as everything is the same 12theta is generally expressed as a negative number for long positions and a positive number for short positions it can be thought of as the amount by which an option s value declines daily for instance a theta of 0 05 indicates that the option s price will decrease by five cents per day investopedia julie bangunderstanding thetaoptions give the buyer the right to buy or sell an underlying asset at the strike price before the option expires the strike price also called an exercise price is set when the contract is first written for the price the underlying asset must reach before the option can be exercised options greeks or simply greeks are invaluable tools for these investors the mathematical variables help investors calculate the risks that influence an option s price especially as it nears its expiration time is one of the risks for option buyers since options are only exercisable for a certain period simply stated an option s profitability decreases as time goes on theta measures the time decay or erosion of an option s value as time passes 