Question
Which of the following measures the time decay on option
premium?Solution
Theta is a measure of the time decay of an option i.e. the dollar amount an option will lose each day due to the passage of time. ·        For at-the-money options, theta increases as an option approaches the expiration date. ·        For in- and out-of-the-money options, theta decreases as an option approaches expiration
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Complete the sentence with the appropriate word.
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