time decay

time decay
Related: theta
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The propensity of time value for an option to erode as expiry ( expiry date) draws near. Time decay is not linear; in the early life of an option time decay occurs slowly, but the rate of time decay begins to increase the nearer to expiry one goes. Time decay acts to the benefit of writers of options and to the detriment of holders of options. Dresdner Kleinwort Wasserstein financial glossary
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A term used to describe how the value of a warrant erodes or reduces with the passage of time. Time decay is quantified by theta. NYSE Euronext Glossary

* * *

   ► See Theta.

Financial and business terms. 2012.

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