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remindsmeofbae t1_ja82usb wrote

Reply to comment by remindsmeofbae in is there fed roulette this week? by bioknockout

I understand calls and puts. But, theta is confusing.

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dasboot523 t1_ja87lbk wrote

If you understand Calls and Puts you understand Theta. Someone is on the other side of all those trades you make that person is Theta. When you buy a SPY option 1 week to expiration for $300 the person that sold you that contract is hoping it expires worthless. The theta value on a contract is how much the price of an option should decrease each day as the option nears expiration, if all other factors remain the same.

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