Theta

Theta measures the rate of change in an options price relative to time. This is also referred to as time decay. Theta values are negative in long option positions and positive in short option positions. Initially, out of the money options have a faster rate of theta decay than at the money options, but as expiration nears, the rate of theta decay for OTM options slows and the ATM options begin to experience theta decay at a faster rate. This is a function of theta being a much smaller component of an OTM option's price, the closer the option is to expiring.