Option Theta

Option Theta calculates the Theta value of an option using the Black-Scholes pricing model. Theta measures the amount an option's price declines due to the passage of one day. An option is a wasting asset whose price is determined, in part, by the time remaining until expiration. The closer an option moves to expiration, the faster time value decays. Theta provides traders with a method to determine how much time will erode the value of an option at any point in time.