Hi Is it possible to visualize/plot Time Decay value of an option as time goes ? Maybe it's already implemented in any platform?
There's this thing called A SEARCH ENGINE? And if you were to pose "Option Time Decay image" to it?? You'd see stuff like https://duckduckgo.com/?q=option+time+decay+image&t=ffsb&iax=images&ia=images
Maybe I did not formulate the question correctly. I am after being able to derive that value out of premium cost and be able to plot it as it decays.
https://duckduckgo.com/?q=black+scholes+merton+pde+profit+attribution+form&t=ffsb&ia=web As well, your trading platform probably has per-strike theta available. Throw it into a .csv, and when you have enough, have at it.
Not really sure if this will help - take whatever model you are using(if any) and tee it up and then holding everything else constant knock a day out of the time to expiration. As has been mentioned - models are available all over the internet if your broker doesn't offer one.
If you want the projection of theta for a given strike and expiration - i.e., a plot of what it should look like from a given time t - then your broker's platform should be able to plot it for you. E.g., the TradeStation platform: A surface for a range of strikes: Taking what you wrote more literally ("I am after [...] as it decays"), i.e., you want to plot it in real time, then theta is just the change in option value over change in time to expiration, a trivial bit of coding.
You can't plot actual time decay on a time line, because time decay has many more variables involved beyond just time. Some softwares will guestimate what it would be using the current greeks of that position, but the greeks will change over time.
That's what I am running into after trying to understand the dependencies of this decay. It does not seem just liner time progression to me. But I am yet very basic in options understanding. It did not prevent me from coding a hedging strategy that works. My problem now is options I buy turn out higher in price from what I would wanted to buy them at. So this higher premium is eating up a part of my profits..
If you are buying options and they are going higher in price then that is a good thing. Are you trying to say that you are getting filled at a higher price then you expect?
Maybe I confused something in my writing. No, the issue I was describing is that one of my strategies sells and buys securities (stocks/future) according to a particular algorithm. Each time when I have certain amount of contracts or shares I use options to hedge against a rapid move. According to another logic I then search for a best suited options chain with needed expiration and the strike (according to positions Im hedging) then I just buy at Market price. That's what I meant when I said premiums cost gets higher for me more than I would wanted to be... I can send a limit order, but I don't want to risk of not being filled and have No coverage for my positions..but that's another story...