Do Options Decay Over Time?

If time isn't the enemy, why do options "decay"? In this episode, Bill Johnson challenges one of the most persistent myths in options trading: that time itself destroys value. Traders are taught that theta is decay, that options melt like ice cubes, and that expiration is simply erosion. But time doesn't cause value to disappear. It records the resolution of information. Using a simple but powerful metaphor—a game of 100 upside-down cups hiding a single $100 bill—Bill reframes options as contracts that move along an information–time grid. As time passes, information is revealed. When useful information arrives, option value can rise. When uncertainty resolves against you, value falls. And when nothing meaningful happens, the option didn't "rot"—uncertainty simply failed to resolve in your favor. You'll learn why: Theta is not decay, but the price of waiting for uncertainty to resolve Instant price gaps prove time isn't what removes value—information is Hedging theta often means outsourcing information, not reducing risk Short-term theta collection comes with concentrated gamma risk Expiration is not zero time—it's full information resolution Options don't decay. Uncertainty does. And when traders misunderstand that distinction, they begin managing clocks instead of managing exposure to information. Understanding how options move through time and information changes how you think about theta, gamma, and the true source of risk.