Theta
The speed at which an option's premium melts simply because time has passed.
Formula
\Theta = \frac{\partial C}{\partial t}The derivative of the premium with respect to time. Theta works against the buyer of an option and in favour of the seller.
How to read the number
Theta is the price of waiting: the buyer pays it every day lived, the seller lives on it.
When the metric lies
Decay is uneven and accelerates towards expiry, differently for different strikes. An estimate of so much per day stops working near the end of the option's life.
Also known as: option theta, time decay