Theta, also known as time decay, is a measure of the rate of decline in the value of an option as time passes. It is the rate at which the extrinsic value of an option decreases with the passage of time, assuming all other factors remain constant. Theta is particularly important for options traders who engage in short-term trades or employ strategies that involve holding options for a short period of time. As an option approaches expiration, its theta increases, reflecting the accelerating rate at which time is eroding the option's value.

The Greeks are a set of risk measures that describe the sensitivity of an option's price to various factors such as the underlying asset's price, time decay, and implied volatility. The Greeks are useful tools for options traders and can help them better understand the risks and potential rewards of their positions. Here are the most commonly used Greeks:

Delta: Delta measures the sensitivity of an option's price to changes in the underlying asset's price. Delta is expressed as a number between 0 and 1 for call options and between 0 and -1 for put options. A delta of 0.5 means that for every $1 change in the underlying asset's price, the option's price will change by $0.50.

Gamma: Gamma measures the rate of change of delta in response to changes in the underlying asset's price. Gamma is expressed as a number between 0 and 1. A high gamma value means that delta will change quickly in response to small movements in the underlying asset's price.

Theta: Theta measures the sensitivity of an option's price to time decay. Theta is expressed as a negative number and represents the amount that an option's price will decrease over time as it approaches expiration. For example, a theta of -0.05 means that the option's price will decrease by $0.05 per day.

Vega: Vega measures the sensitivity of an option's price to changes in implied volatility. Vega is expressed as a positive number and represents the amount that an option's price will increase or decrease for every 1% change in implied volatility.

Rho: Rho measures the sensitivity of an option's price to changes in interest rates. Rho is expressed as a positive or negative number and represents the amount that an option's price will increase or decrease for every 1% change in interest rates. Rho is most important for options that have a longer time to expiration.

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