Question

What is theta? Explain?​

Answer 1

Theta is a native blockchain with an open-source protocol, meaning that it allows developers and partners to build decentralized applications on the network, as Ethereum does. It is a decentralized, peer-to-peer video delivery network powered by blockchain technology that enables free, high-bandwidth content delivery.

Answer 2

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$\star$ Concept

The term theta refers to the rate of decline in the value of an option due to the passage of time. It can also be refered to as the time declared of an option this means and option loses value as time moves closer to its maturity as long as everything is held constant . Sita generally expressed as negative number and can be thought of as the amount by which an option value decline everyday .

$\star$ Key Takaways

$\sf\implies$ Theta refers to the rate of decline in the value of an option of a time

$\sf\implies$ If all the other variables are constant and option will lose value as time goes closer to its maturity

$\sf\implies$ Theta usually expressed as a negative number indicates how much option value will decline everyday approve maturity .

Understanding Theta :

theta is a part of the group of measures known as the greeks which are used to be options pricing remember $\rightarrow$ option give the buyer the right to buy or sell and underlying asset at the strike price before the option next five years they strike price which is also called an exercise price is a set of when the contract is a first written informing the investor of the price at which the underlying asset must reach before the option can be exercised .

$\sf\implies$ because theta represent the risk of time and the loss of value of an option it is always expressed as a negative figure the value of the option diminishes as time passes until the expiration date since theta is always negative for long afterwards there will always be a zero time value when the option expires this is why theta is a good thing for sellers but not for buyers value decreases from the buyer's aside as time goes by but increases for the seller that's why selling an option is also known as positive theta trade as theta accelerates the sellers earnings on their options increase

Minnie