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Time decay
3 guides in Finabase Learn
- Option premium and time value: decay, volatility and Black-Scholes What drives an option premium, why time value melts faster near expiration, what implied volatility measures, and the intuition behind the Black-Scholes model.
- Theta The option Greek that estimates how much an option’s price falls with each day that passes, all else equal; the measure of time decay.
- Time value The part of an option’s premium above its intrinsic value: what buyers pay for the chance the option gains value before it expires.
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