I have been trading options for a few months and I noticed that theta values behave differently as expiration approaches.
It seems like the time decay increases significantly in the last few days.
Is this expected or am I misunderstanding theta?
Theta truly accelerates as expiration approaches. In the last week, options lose value significantly faster, especially during the last few days. You can compare it to water draining from a bathtub—it starts slowly, then speeds up. This is normal, so plan accordingly. If you’re holding options near expiration, that rapid time decay can eat into your profits. Many traders either close their positions about a week out or capitalize on this by selling options rather than buying.
Lost $800 on Apple calls three months ago because I ignored theta completely.
Held them too close to Friday expiration thinking I had time. Theta burned through my position even when the stock moved my way.
Now I always exit by Wednesday if I’m holding weeklies. That final 48 hours is brutal for time decay.
That behavior is expected. Theta isn’t a straight line; it accelerates as expiration gets closer.
The final two weeks can really bite if positions are held too long. Weekly options decay even faster, making timing crucial.
Theta decay is not linear. Expect exponential acceleration in the final 30 days. At-the-money options face the largest theta effect during the last week.
Theta decay is steepest in the last week. It can reach -0.10 daily.