Options lose value over the weekend just like they do on other days. Long weekends add even another day of depreciation due to time decay, which is measured by Theta. This means that a trader can have a very slight edge by selling options on Friday, only to buy them back the following Monday.

Does theta decay happen over the weekend?

Options lose value over the weekend just like they do on other days. Long weekends add even another day of depreciation due to time decay, which is measured by Theta. This means that a trader can have a very slight edge by selling options on Friday, only to buy them back the following Monday.

How much does theta decay over weekend?

Pricing models take into account weekends, so options will tend to decay seven days over the course of five trading days. However, there is no industry-wide method for decaying options so different models show the impact of time decay differently.