The time value of a call option is likely to decline most rapidly ________ days before expiration?
A) 10
B) 30
C) 60
D) 90

Question

Quizplus · Accepted Answer

The time value of an option declines most rapidly as the expiration date approaches. Option traders refer to this phenomenon as "theta decay" or "time decay". Typically, the rate of time decay accelerates in the final 30 days before expiration, especially in the last two weeks. Therefore, 10 days before expiration is the time when time decay is likely to be most rapid.

The Time Value of a Call Option Is Likely to Decline