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The Relationship Between Theta and IV

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Theta and Implied Volatility (IV) have a direct linear relationship, meaning that when one goes up by a certain percentage, the other also goes up by the same percentage.

Additionally, the larger the delta of the strangle, the larger the theta value of that strangle.

Watch Tom and Tony dive into this relationship with the help of some research driven graphics.

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