Is more the time less the premium in option as per time decay ?
Answers
Answered by
0
Explanation:
As expiration nears, the rate of time-value decay (theta) increases (not shown here). This means that the amount of time premium disappearing from the option's price per day is greater with each passing day. ... At five days remaining until expiration, the option is losing 1 point in just less than half a day (0.45 days).
Answered by
2
The option would have intrinsic value, while time decay would increase at a slower rate. This acceleration is because as more time passes, the option becomes less and less likely to become in-the-money. The loss of time value happens even if the value of the underlying asset has not changed during the same period.
Similar questions