Theta

I look at a weekly option chain for 12.3, option price 20.10 .
If i see a Theta of -1.432 , how much will the option price decline if all other factors stays the same?
Thanks,
TAL

 

Theoretically, 1.432 per day (All other things staying the same).

 

1.432 on the first day.
(more towards expiration)

 

And it will be less if other factor changes

 

JSOP is just here for the anal. Disregard his rambling as he is, of course, wrong.

 

Keep in mind this is theoretical, actual price changes still result from people hitting orders.

 

Theta is not linear number. It is non-existent if you are option seller and hits like truck if you are buyer.

 

It is an important part of your potential gain if you are a seller.

 

It only becomes non-existent if you are option seller when the market is going the the wrong direction to your selling position, i.e. when you are selling puts, the market is going down, otherwise you want it to hit like a truck when you are the option seller.

 

This thread just reminded of the saying
"Theta is not an edge"