See how theta affects both calls and why time can hurt, help or have little effect depending on price relative to the strikes.
Below the long strike
When both calls are OTM, the spread often has negative theta because the long call carries more value and sensitivity. A quiet underlying can steadily erode the debit.
Between the strikes
Time decay remains sensitive to the exact price. Near expiration, intrinsic value begins to dominate, and net theta can change quickly as the probability of finishing within the spread shifts.
Above the short strike
When both calls are ITM and the spread is near maximum value, the passage of time may help the spread converge toward full width. Execution prices and early-assignment considerations still matter.
Use a time exit
Track days remaining and the percentage of maximum profit already captured. Waiting for the final dollars can expose the position to sharp gamma and give back a large portion of an open gain.
A practical example
A 100/110 spread worth $8.80 with the stock above $112 may gain toward $10 as time passes, while the same spread below $100 can decay toward zero.
This simplified example focuses on the spread at a specific moment and expiration outcome. Live option prices also reflect the underlying price, time decay, rates, dividends, liquidity and transaction costs. Greeks are theoretical estimates, not guarantees.
Frequently asked questions
Is theta always negative?
No. Its sign can change with price and time.
Does the short call reduce decay?
It offsets part of the long call's negative theta.
Why avoid the final days?
Gamma and assignment risk can become concentrated.
Continue the Bull Call Spreads cluster
Explore related guides: When to Close a Bull Call Spread · How to Build a Bull Call Spread · Bull Call Spread vs Long Call. For a structured sequence, use the free Level 9 – Bull Call Spread Strategy course.
Options involve risk and are not suitable for every investor. This material is educational and is not investment, tax or legal advice. Greeks are theoretical estimates, and contract terms and broker requirements can vary.