Theta

Theta is the dollar amount an option loses to time decay each day, all else equal. A theta of -0.05 means the option sheds $0.05 per share overnight — $5 per contract — even if the stock does not move.

Decay is not linear. It accelerates as expiration approaches, hitting at-the-money options hardest in the final two weeks, because that is where extrinsic value is concentrated. Option buyers pay theta; option sellers collect it, which is why income strategies like covered calls and iron condors are structurally short options.