What's the Option Decay for Holding Overnight?

[schizo]

Say I want to play the company earnings by buying the options at the MOC and sell at MOO. How much am I to expect to lose just on time decay?

 

[marcoPolo21]

it [all] depends

pennies, would be my guess

marc

 

[deltastrike]

Theta

 

[schizo]

Theta

Well, duh.

But how much will it eat into my premium? (Read the first post.)

 

[deltastrike]

It's your theta, haha.

 

[DarthSidious]

Hey @schizo Here's from cboe.com. Here, your call theta is 0.6499. So you will lose 0.6499 x 100 = $64.99 per day just for Theta. Does that help?

 

[deltastrike]

Hey @schizo Here's from cboe.com. Here, your call theta is 0.6499. So you will lose 0.6499 x 100 = $64.99 per day just for Theta. Does that help?

That was way more effort than I was willing to put into that answer...

 

[DarthSidious]

Well, In this case, it was better not to answer in a brief way. If someone understands completely what Theta is and how it works, they probably won't ask. If they do, it requires more explanation. So...

 

[deltastrike]

Well, In this case, it was better not to answer in a brief way. If someone understands completely what Theta is and how it works, they probably won't ask. If they do, it requires more explanation. So...

You are a gentleman and a scholar.

 

[Jones75]

Hey @schizo Here's from cboe.com. Here, your call theta is 0.6499. So you will lose 0.6499 x 100 = $64.99 per day just for Theta. Does that help?

View attachment 161335

Not sure why you're multiplying by 100. The "theta" shown on the chart is -.6440, which = in theory, the option price will drop .64 (64 cents) per day.