Which option decays fast?

ATM options are notably characterized by their high rate of decay, a phenomenon that persists under conditions of parity.

As these options transition towards either out-of-the-money (OTM) or in-the-money (ITM) status, the rate of decay experiences a marked decrease, ultimately converging towards zero.

Furthermore, the temporal dimension plays a pivotal role in influencing the rate of decay. Specifically, shorter-term options undergo a more rapid decay compared to their longer-term counterparts, assuming all other variables remain constant.

This accelerated rate of decay becomes increasingly pronounced as the expiration date of an option draws near, signifying the intensifying impact of time on the value of the option.

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