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When trading options on the Nifty Index, one key factor to consider is time decay (Theta)—which accelerates as expiry approaches. If you're holding options till expiry, here's how the premium melts, especially in an ATM (At-the-Money) or OTM (Out-of-the-Money) long position.

A long straddle involves buying ATM Call & Put options expecting big movement in either direction.

If Nifty doesn’t move much, both Call & Put lose time value, leading to premium erosion.
If Nifty stays near the strike price, you lose most of the paid premium.

Why Does Premium Melt Faster Near Expiry?
Time Decay (Theta) is non-linear → It speeds up as expiry approaches.
If there's low volatility (Vega drop), premiums fall faster.
On expiry day, OTM options become zero, and ATM options lose value if there’s no strong movement.


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