Negative theta?

[rallymode]

Quote from optioncoach:

theta is always expressed as a negative number.

Phil, didnt they teach you in high school algebra that -(-) equals +? You must've been chasing skirts. lol

 

[rallymode]

Quote from AmbushHillbilly:



I seem to recall a short, European-settled option might show a positive theta, but I've never seen it and may be way off.

Right. Some cash and euro settled ops trade at a discount to intrinsic all the time. VIX ops are a good example of this. So are ops on supply side products during backwardation. In such cases the time value of an option is negative and converges to spot with the passage of time. In those cases, the effect observed is synthetically equivalent to being +gamma and +theta simultaneously.

 

[IV_Trader]

Maybe right before one time ( large) dividend on the low vols stock with few days to exp , no ?

 

[hopback]

Quote from FullyArticulate:

I can't think of a situation that someone would PAY YOU to allow them to take on risk. Negative Time Value would require the option to be worth less than its intrinsic value. Who would sell you that?

Perhaps he meant combinations of options?

Deep ITM european style option will often trade below parity.

They price time and vol out of the option to create a negative carry and it rises to parity as expiration approaches.