When it comes to trading options one of the most basic and important aspects to understand is the concept of time value of an option. In technical parlance it is known as “Theta”, which essentially represents the time decay of the value of an option. Normally, time works against the buyer of an option but works in favour of the seller of the option. That is because option is a wasting asset and the time value of any option on the expiry date is zero.

When it comes to trading options one of the most basic and important aspects to understand is the concept of time value of an option. In technical parlance it is known as “Theta”, which essentially represents the time decay of the value of an option. Normally, time works against the buyer of an option but works in favour of the seller of the option. That is because option is a wasting asset and the time value of any option on the expiry date is zero.