Which of the following best describes "Theta"?

Theta represents the rate at which an option's price declines as it approaches its expiration date. This concept is crucial in options trading because it quantifies the time decay of an option. As the expiration date draws nearer, the probability of the option expiring in-the-money decreases, resulting in a gradual decrease in its premium or price. This phenomenon is particularly pronounced for options that are out-of-the-money.

In contrast, other choices address different aspects of options pricing and trading. For example, the concept of price sensitivity to volatility refers to Vega, not Theta. Correlation between different types of options isn't related to time decay but rather reflects how various options may react to changes in the underlying asset price. Lastly, the impact of interest rates on option pricing is associated with Rho, which measures how much the price of an option will change in response to changes in interest rates. Thus, the focus of Theta is specifically on time decay, making it the best description of that concept.