Theta is the simplest Greek to read — and the one most option buyers ignore until it is too late. In plain English: theta is how many dollars the option loses every day the stock does nothing. Every morning you wake up, time has passed, and theta has already subtracted from your P&L.

Theta in One Sentence

A theta of -0.08 on a long call means that, all else equal, the option will be worth $8 less tomorrow (per contract) than it is today. Multiply by the number of contracts and you have your daily "rent" on that position.

Buyer
Pays theta every day
If you are long an option, theta is a drag. Your position loses value automatically, so you need the stock to move enough, fast enough, to overcome the daily bleed.
Seller
Collects theta every day
If you are short an option (cash-secured put, covered call, credit spread), theta works for you. Every calm day the stock does nothing is a day you win.
Accelerates
Last 30 days are worst
Theta is not linear. It accelerates as expiration approaches — roughly √(time) curve. The final month of an option's life carries the steepest decay.

How to Compute Your Daily Theta Bill

Run this calculation on every open options position, long or short:

  1. Daily theta $ = contracts × theta × 100. Negative for long, positive for short.
  2. Sum across the whole book. Net theta tells you whether tomorrow, under a totally flat market, your options account gains or loses — and by how much.
  3. Compare to the premium collected. If you collected $300 premium and daily theta is +$15, you break even in ~20 days of flat market. That is your realistic hold target.
Buying a 2-week call and then holding through a quiet week is one of the most expensive mistakes in retail options trading. You did not lose on direction — you paid rent on time you did not use. Read theta before entering, not after.

Where to See Theta in the App

The Risk Signals dashboard shows per-contract theta alongside delta. The top-level portfolio strip sums net theta across every open options position so you can see a single number: what this book earns or costs tomorrow if the market does absolutely nothing.

Theta = dollars lost per day from time alone
Buyers pay it · sellers collect it · it accelerates near expiry
Your net theta tells you what a flat market costs you tomorrow

Check your net theta now →