Theta Decay

Theta decay is the gradual loss of value in an options contract (a contract giving you the right to buy or sell a stock at a set price) simply because time is passing. Every day that goes by, an option becomes less valuable—even if the stock price stays exactly the same—because there's less time left for the option to become profitable. You'll encounter this when trading options, and it matters because it works against you: your position loses money just from waiting. For example, if you buy a call option (the right to buy stock at $50) with 30 days until expiration, that option will be worth less tomorrow with 29 days left, all else equal.