™An option model can estimate time decay of $0.05 per share for a small passage of time, holding other inputs fixed; actual price also responds to other changes.
Options
Theta
An estimate of how an option’s value may change as time passes, all else equal.
Plain-English context
Put the definition to work.
Time decay is a model sensitivity with a stated unit; volatility, price and dividends can offset the observed effect.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. OCC / Options Industry Council — options basics