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Question about theta
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It was my understanding that Theta represented the decrease in value over time. Example I have a contract that has a -1.6 theta, so every day it'll go down $1.6 in value (hope that's right).
However I've recently discovered it's actually applicable only if the stock doesn't move (much)? If it's the former please let me know. If it's the latter, what parameters are used to determine if the stock price hasn't changed enough for theta to apply?
Thanks
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- 6 years ago
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