Extrinsic Value vs Theta

The portion of an option's market price above its intrinsic value; also called time value; reflects the time remaining until expiry and the implied volatility of the underlying; declines to zero at expiration regardless of the underlying price.

The rate of change of an option's price relative to the passage of one day, all else equal; always negative for bought options (time decay reduces value); always positive for sold options; accelerates as expiry approaches; measured in dollars lost per day from time decay.