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Related to Theta: Theta waves
The decline in value of an option contract over the passage of time. Assuming all other factors (such as the price of the underlying security) remain constant, the price of the option will decline as the expiration date nears because it becomes less likely that the option will be in-the-money or out-of-the-money at expiration. Theta is an attempt to quantify this fact. It is important to note that because other factors do not always remain constant, the price of the option does not always decline according to the theta.
The sensitivity of an option's market value relative to a change in the time to expiration. Theta is a measure of time decay and tends to grow larger as an option approaches expiration.