Discuss the concept of option expiration and its implications for option pricing, including the potential for time decay.

Option expiration refers to the date and time when an option contract ceases to exist. At expiration, the option holder has to decide whether to exercise their right to buy or sell the underlying asset, or let the option expire worthless. This concept has significant implications for option pricing, particularly the phenomenon known as time decay. Time decay, also referred to as theta, is the rate at which an option's value declines as it approaches expiration. This happens because as time passes, the possibility of the underlying asset price moving significantly in the option holder's favor decreases. Options with shorter timeframes exhibit faster time decay compared to those with longer expiration dates. Here's how time decay impacts option pricing: Higher Time Decay for ....