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THETA DECAY

Theta Decay Simulator

See exactly how option premium erodes day by day as expiry approaches. The silent killer of option buyers — visualize theta decay before you hold overnight.

See exactly how option premium erodes day by day as expiry approaches. The silent killer of option buyers — visualize theta decay before you hold overnight.

  • Get an instant result with the exact inputs that matter for this metric.
  • Compare scenarios quickly (best case vs worst case) before taking action.
  • Understand what the output means and how traders/investors use it in practice.
  • Use it for planning and education — no login required.

Theta Decay Simulator

Current Premium

477.72

Value at Expiry

0.00

Total Decay (pts)

477.72

Total Decay (₹)

35,829

per lot (75 shares)

Premium Decay Over Time

Day 0 (30 DTE)Expiry Day

Day-wise Decay Snapshot

DayDTEPremiumTheta/dayDecay (₹)
030477.729.09682
723410.9410.05754
1515323.8811.91893
228229.9915.481161
237214.0716.391229
273136.6823.871790
29177.3239.742981
3000.000.000

DETAILS

About this Theta Decay Simulator

This section explains what the calculator does, what goes into the result, and how to interpret the output so you can apply it confidently.

What this tool does

Purpose

This calculator turns a few key inputs into a clear output you can act on — a number that traders and investors commonly use for planning and decision-making.

Use it to compare scenarios quickly and to understand the trade-offs behind the final result.

When it is helpful

  • To sanity-check assumptions before committing money.
  • To compare two or more scenarios side-by-side (conservative vs aggressive).
  • To convert a “feel” into a number you can plan around.
  • To learn what the metric means and how it is used in practice.

How to read the result

Interpretation

Treat the output as a planning number. Small changes in inputs (time, rate, price, quantity, risk, or cashflows) can change the outcome meaningfully — so keep assumptions realistic.

If the tool returns multiple outputs, focus on the ones that drive decisions (e.g., net result, breakeven, or risk-adjusted value), not just the biggest number.

Common mistakes to avoid

  • Using overly optimistic return assumptions.
  • Ignoring fees/taxes where they matter.
  • Optimizing precision instead of making a better decision.
  • Treating the result as a prediction instead of a plan.

Example calculations and results

Example 1 (ATM Call — 30 DTE)

CE: Spot ₹24,000, Strike ₹24,000, DTE 30, IV 15%, Rate 6.5%, Lot size 75

Current premium₹477.72
Value at expiry₹0.00
Total decay (pts)₹477.72
Total decay (₹)₹35,829
Theta (today)₹9.09/day
Theta (₹/day per lot)₹682/day

Graphical view

Start premium
477.72
Expiry value
0.00
Total decay
477.72

Example 2 (OTM Put — 15 DTE, higher IV)

PE: Spot ₹24,000, Strike ₹24,500, DTE 15, IV 25%, Rate 6.5%, Lot size 75

Current premium₹737.28
Value at expiry (intrinsic)₹500.00
Total decay (pts)₹237.28
Total decay (₹)₹17,796
Theta (today)₹12.50/day
Theta (₹/day per lot)₹938/day

Graphical view

Start premium
737.28
Expiry value
500.00
Total decay
237.28

Even with intrinsic value at expiry, option premium can still decay significantly as time value collapses into intrinsic.

HOW IT WORKS

Simple steps to get your result

1

Enter Option Details

Input spot, strike, DTE, implied volatility, and risk-free rate.

2

Choose CE or PE

Select call or put option type.

3

See Day-by-Day Decay

View a premium decay chart and table showing how much value evaporates each day.

FAQ

Frequently asked questions

Why does theta decay accelerate near expiry?+

Time value decays non-linearly — it decays slowly when there is lots of time, and then rapidly in the final 7-10 days. This is because uncertainty (hence premium) collapses as expiry nears.

Should I avoid buying options near expiry?+

Buying options in the last week is very risky due to rapid theta decay. Unless you are expecting an immediate move, the odds strongly favour sellers in the final days.

Does theta decay happen on weekends?+

Yes — options premium typically accounts for weekend decay, meaning Monday open often shows 3 days of theta already priced in (Friday's theta × 3).

What is a good IV to use?+

Use the current implied volatility from NSE's option chain for the specific strike. For Nifty ATM options, IV typically ranges between 10% and 25%.

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