I have been trading options for some time. I learned that theta decay happens fast in the last few days before expiration.
I lost money by ignoring this at first. Now, I always check the time left and time decay.
Do others notice how quickly options lose value at these times?
Theta decay gets vicious after Wednesday on weeklies. People think they get it, but they’ve never actually done the math on their position size. Take your theta number, multiply it by your contracts - that’s cash vanishing daily. Do this before entering any trade within 10 days of expiry.
This video shows exactly how theta works in those final days. Traders get blindsided by the speed because they never learned the acceleration curve.
Time decay hits hard in those final days. Most options expire worthless on Friday if they are out of the money. Closing positions by Tuesday or Wednesday is a safe move. Even profitable trades can get crushed by theta. There is just not enough time left for the option to move your way.
Letting theta catch me off guard cost me a lot. Always watch that closely.
Made this exact mistake on a Tesla call last month. Held it through Thursday before Friday expiration thinking I had time.
Watched it drop 40% in one day just from theta burn. The underlying barely moved but my option got crushed.
Now I never hold past Wednesday if I’m not already profitable.
Theta accelerates in the last week. Options can lose 60-70% of value in the final 5 days. Monitor daily theta closely.