Theta Decay

Theta decay is the gradual loss of value in an options contract as time passes, even if the stock price stays exactly the same. Think of it like a coupon expiring—the closer you get to the expiration date, the less it's worth. You'll encounter this mainly when trading options (contracts that give you the right to buy or sell a stock at a set price). It matters because theta decay works against you if you're buying options, but it works *for* you if you're selling them. For example, if you buy a call option on TechCorp stock with 30 days until expiration, that contract loses value every single day just from time passing, regardless of whether TechCorp's stock moves up, down, or stays flat.