Читать книгу Binary Options - Hamish Raw - Страница 31

Theta is a ratio that measures how much the bet price will change due to the passing of time.

Theta is probably the easiest ‘greek’ to conceptually grasp and is possibly the most easily forecast since the passage of time itself moves in a reasonably uniform manner.

Bets on many financial instruments are now always ‘in-running’, i.e. there is always a market open on which to trade. These days there is a 24-hour market in foreign exchange trading so any bet on the future level of the $/£ rate is always ‘in-running’ with the theta constantly impacting on the price of bets. On other markets which operate in discrete time periods, where the market is open for a limited period of five days a week, market- makers will often use Monday’s theoretical prices on a Friday afternoon in order not to get too exposed to the weekend’s three-day time decay.

An understanding of time decay and theta is thus critical to the trading and risk management of binary options. The remainder of this section on theta will analyse the effect of time decay on upbets and downbets, and how this impact on the price of a bet is measured.