Cryptocurrency Q&A
Does theta decay when market is closed?
Does theta decay when market is closed?
TopazRider
Thu May 23 2024
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7 answers
2024
Does theta decay occur even when the market is closed? Is the decay process continuous regardless of trading hours, or does it pause during non-trading periods? Is theta decay solely determined by market forces, or are there other factors at play? Could the closing of the market have any impact on the rate or magnitude of theta decay? Is it possible to predict how theta decay will behave during off-market hours?
7 answers
Eleonora
Sat May 25 2024
Cryptocurrency trading often involves strategic bidding and offerings, especially preceding weekends. Traders may bid up certain options or offer them down, anticipating market movements.
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Giulia
Sat May 25 2024
This activity ceases until the market reopens on a weekday, as trading is suspended during weekends. This pause creates a unique trading environment, where prices are STATIC for an extended period.
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LightWaveMystic
Sat May 25 2024
Theta decay is a crucial concept in option pricing, reflecting the time value of money. As time passes, the value of an option decreases, due to the approaching expiration date.
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Raffaele
Fri May 24 2024
Friday's closing price incorporates this theta decay, reflecting the reduced value of options as the weekend approaches. Traders factor in this decay when making their decisions.
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Chiara
Fri May 24 2024
However, this theta decay is often offset by an increase in implied volatility. Implied volatility measures the market's expectation of future price fluctuations.
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