How does the theta decay curve affect the pricing of digital assets?

1 answers

• dwgfhgNov 30, 2023 · 2 years ago
  The theta decay curve is an important factor to consider when pricing options on digital assets. It represents the rate at which the time value of an option decreases as it gets closer to expiration. This decay affects the pricing of digital assets because options are commonly used in the cryptocurrency market to hedge risk or speculate on price movements. Traders need to be aware of the theta decay curve when valuing options, as it can impact the cost of holding the option and the overall pricing of digital assets. By understanding the theta decay curve, traders can make more informed decisions and potentially improve their profitability in the digital asset market.
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