EDIT i'm tapped out for my posts today bro, ttyl. that also is pretty much what i try to do, then i look at the iv b4 jumping in to make sure its not up 400 percent or somthing lol. but we're getting better and better.
yup sounds about right.. for the most part this is the greek you keep an eye on when figuring out loss as far as time goes.
Theta
Theta, a.k.a. time decay, is an estimate of how much the theoretical value of an option decreases when 1 day passes and there is no move in either the stock price or volatility. Theta is used to estimate how much an option's extrinsic value is whittled away by the always-constant passage of time. The theta for a call and put at the same strike price and the same expiration month are not equal. Without going into detail, the difference in theta between calls and puts depends on the cost of carry for the underlying stock. When the cost of carry for the stock is positive (i.e. dividend yield is less than the interest rate) theta for the call is higher than the put. When the cost of carry for the stock is negative (i.e. dividend yield is greater than the interest rate) theta for the call is lower than the put. Long calls and long puts always have negative theta. Short calls and short puts always have positive theta. Stock has zero theta – its value is not eroded by time. All other things being equal, an option with more days to expiration will have more extrinsic value than an option with fewer days to expiration. The difference between the extrinsic value of the option with more days to expiration and the option with fewer days to expiration is due to theta. Therefore, it makes sense that long options have negative theta and short options have positive theta. If options are continuously losing their extrinsic value, a long option position will lose money because of theta, while a short option position will make money because of theta. But theta doesn't reduce an option's value in an even rate. Theta has much more impact on an option with fewer days to expiration than an option with more days to expiration. For example, the XYZ Oct 75 put is worth $3.00, has 20 days until expiration and has a theta of -.15. The XYZ Dec 75 put is worth $4.75, has 80 days until expiration and has a theta of -.03. If one day passes, and the price of XYZ stock doesn't change, and there is no change in the implied volatility of either option, the value of the XYZ Oct 75 put will drop by $0.15 to $2.85, and the value of the XYZ Dec 75 put will drop by $0.03 to $4.72. Theta is highest for ATM options, and is progressively lower as options are ITM and OTM. This makes sense because ATM options have the highest extrinsic value, so they have more extrinsic value to lose over time than an ITM or OTM option. The theta of options is higher when either volatility is lower or there are fewer days to expiration. If you think about gamma in relation to theta, a position of long options that has the highest positive gamma also has the highest negative theta. There is a trade-off between gamma and theta. Think of long gamma as the stuff that provides the power to a position to make money if the stock price starts to move big (think of a long straddle). But theta is the price you pay for all that power. The longer the stock price does not move big, the more theta will hurt your position. Position theta measures how much the value of a position changes when one day passes. Position theta is calculated much in the same way as position delta, but instead of using the number of shares of stock per option contract, theta uses the dollar value of 1 point for the option contract. (The dollar value of 1 point in an option contract for U.S. equities is usually $100, but can be different due to stock splits.) thinkorswim takes the theta of each option in your position, multiplies it by the number of contracts and the value of 1 point for the option contract, then adds them together.
Your kinda right in your thinking and 4n gave a great theta lesson but here a quick aapl weekly expiring this week based off of cboe before the market opens today.
price closed 571ish and the 570 strike option price = 3.86 delta = 0.58 it goes up per dollar theta = 1.51 it goes down per day or .21 per hour, so in 3 hours we need one dollar move just to stay even.
A look at the 575 Option price = 1.44 delta = 0.31 theta = 1.27 or it goes down .18 per hour but at the end of the day if this does not move this option will be worth 0.17 or I will need 1.27 theta/0.31 delta = $4.00 move just to stay even today.
The 580 strike has a price of 0.77 and a theta of 1.07. We know that this is not possible but it could be .01 by days end.
theta increases the closer it gets to expiration and is working by the hour do to the computers taking everything into account.
So like I said yesterday if we aint a movin then we are a losin. Or just dont sit to long. You play a lot of off the bottom to find the best price and your timing is prove pretty great with that. You just have to figure the cost of sitting while that happens.
By the way saw you dropped the macd for the ppo. I notice this while looking at all our charts. Has it helped?
Market Data 
Markets 
AI
