Does an ITM Option Lose Time Value Faster or Slower than an OTM Option, All Else Equal?

Generally, ATM and near-the-money options experience the fastest time value decay (highest Theta) in absolute dollar terms, especially as expiration nears. However, OTM options, while having a lower absolute theta, lose a greater percentage of their value because their entire premium is time value.

Deep ITM options typically have the slowest time decay because their value is dominated by intrinsic value.