theta is always negative for long calls and long put  Discussion
in 'P1.T3. Financial Markets & Products (30%)' started by
qin841121, May 9, 2012.    1. qin841121      qin841121 Member
This is a statement by schweser and also investopedia. How can
it be true?      For long put, the longer the option, the
cheaper it may get as the expected price of stock will be higher
due to interest and because of this the put will decrease in
value?      What is wrong with my logic?   2. Theta for a long
call is always negative. True.      However, Theta of a long put
always exceeds the theta of a call by a fixed amount. Hence for
out-of-money puts, the theta may be positive also.      Another
concept to be aware of, theta is measured in terms of "time
remaining to maturity (T-t)" in contrast to "time passed (t)" -
thinking in terms of "time passed" may be akin to reversing the
sign of theta.     • Like Like x 1  Share This Page