# How Does Time Decay Affect an In-the-Money Call Option? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

---

## How Does Time Decay Affect an In-the-Money Call Option?

Time decay, measured by theta, negatively affects the time value component of an in-the-money (ITM) call option's premium. As the expiration date approaches, the option's time value erodes.

While the intrinsic value of an ITM option remains, the overall premium decreases due to the loss of time value. This decay is less pronounced for deep ITM options but is a constant factor that reduces the option's total value over time.

- [How Does the “Time Decay” (Theta) Affect the Value of an Option?](https://learn.greeks.live/path/how-does-the-time-decay-theta-affect-the-value-of-an-option/)

- [How Does the Cost of an Option (Premium) Affect the Hedging Strategy?](https://learn.greeks.live/path/how-does-the-cost-of-an-option-premium-affect-the-hedging-strategy/)

- [How Does an Option’s Time to Expiration Affect Its Theta Value?](https://learn.greeks.live/path/how-does-an-options-time-to-expiration-affect-its-theta-value/)

- [How Does Theta Impact the Value of an Option as Its Expiration Date Approaches?](https://learn.greeks.live/path/how-does-theta-impact-the-value-of-an-option-as-its-expiration-date-approaches/)

- [Define “Theta Decay” and How It Impacts OTM Options as Expiration Approaches](https://learn.greeks.live/path/define-theta-decay-and-how-it-impacts-otm-options-as-expiration-approaches/)

- [Does Theta Decay Affect In-the-Money, At-the-Money, and Out-of-the-Money Options Equally?](https://learn.greeks.live/path/does-theta-decay-affect-in-the-money-at-the-money-and-out-of-the-money-options-equally/)

- [Explain the Concept of ‘Time Decay’ and Its Impact on Time Value](https://learn.greeks.live/path/explain-the-concept-of-time-decay-and-its-impact-on-time-value/)

- [How Does Time Decay (Theta) Affect the Value of a Put Option?](https://learn.greeks.live/path/how-does-time-decay-theta-affect-the-value-of-a-put-option/)

## Glossar

### [Time Value](https://learn.greeks.live/area/time-value/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Duration ⎊ The temporal dimension inherent in cryptocurrency derivatives, options trading, and financial instruments fundamentally defines time value.

### [Time Decay](https://learn.greeks.live/area/time-decay/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Decay ⎊ The inherent characteristic of options contracts, time decay, or Theta, represents the erosion of an option's value as it approaches its expiration date.

### [Rate of Time Decay](https://learn.greeks.live/area/rate-of-time-decay/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Erosion ⎊ Rate of time decay, within cryptocurrency options and financial derivatives, represents the quantifiable decrease in an option’s extrinsic value as expiration nears, directly impacting profitability potential.

### [Impact of Time Decay](https://learn.greeks.live/area/impact-of-time-decay/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Impact ⎊ The impact of time decay, formally known as Theta, is the quantifiable reduction in an option's extrinsic value as its expiration date approaches, holding all other factors constant.

## Discover More

### [How Does 'Time Decay' (Theta) Affect the Value of an ITM Option Compared to an OTM Option?](https://learn.greeks.live/path/how-does-time-decay-theta-affect-the-value-of-an-itm-option-compared-to-an-otm-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does 'Time Decay' (Theta) Affect the Value of an ITM Option Compared to an OTM Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Sharp-Edge-Bifurcation-Point-Modeling-Volatility-Skew-in-Blockchain-Derivatives-Settlement-Instruments.webp)

Theta decay impacts the extrinsic value; OTM options are affected more significantly than ITM options which hold intrinsic value.

### [What Is Meant by an Option Being 'In-the-Money' (ITM), 'At-the-Money' (ATM), or 'Out-of-the-Money' (OTM)?](https://learn.greeks.live/path/what-is-meant-by-an-option-being-in-the-money-itm-at-the-money-atm-or-out-of-the-money-otm/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is Meant by an Option Being 'In-the-Money' (ITM), 'At-the-Money' (ATM), or 'Out-of-the-Money' (OTM)?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineered-Cryptocurrency-Asset-Apex-Representing-Volatility-Surface-Skew-Configuration.webp)

ITM means immediate profitable exercise is possible; ATM means spot equals strike; OTM means exercise is not profitable.

### [What Is "In-the-Money" for a Call Option, and What Does It Imply for Its Intrinsic Value?](https://learn.greeks.live/path/what-is-in-the-money-for-a-call-option-and-what-does-it-imply-for-its-intrinsic-value/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "In-the-Money" for a Call Option, and What Does It Imply for Its Intrinsic Value?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Cosmovision-of-a-Cyan-Hydrophilic-Arbiter-Balancing-Speculative-Hedging-Mechanisms.webp)

ITM means the underlying price is above the strike price, giving the option a positive intrinsic value.

### [What Is the Typical Delta Range for a Deep In-The-Money Call Option?](https://learn.greeks.live/path/what-is-the-typical-delta-range-for-a-deep-in-the-money-call-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Typical Delta Range for a Deep In-The-Money Call Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Geometric-Intersection-of-Blockchain-Substrates-Highlighting-a-Volatility-Derivative-Sphere.webp)

Close to 1.0, meaning the option price moves almost dollar-for-dollar with the underlying asset.

### [Does a Flash Crash Affect the Time Value of a Written Call Option?](https://learn.greeks.live/path/does-a-flash-crash-affect-the-time-value-of-a-written-call-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does a Flash Crash Affect the Time Value of a Written Call Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Examination-of-High-Frequency-Trading-Needle-Contact-with-Teal-Liquidity-Pool-Barrier.webp)

Yes, the price drop pushes the call OTM, lowering the probability of

### [How Does Time Decay (Theta) Affect an ITM Option?](https://learn.greeks.live/path/how-does-time-decay-theta-affect-an-itm-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Time Decay (Theta) Affect an ITM Option?](https://learn.greeks.live/wp-content/uploads/2025/10/X-Ray-Chronometer-Hand-Vectors-Suggesting-Implied-Volatility-Skew-in-Decentralized-Finance.webp)

Time decay (Theta) erodes the extrinsic value of an ITM option daily, causing its overall premium to decrease as expiration nears.

### [Explain the "Acceleration of Time Decay" Phenomenon](https://learn.greeks.live/path/explain-the-acceleration-of-time-decay-phenomenon/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the "Acceleration of Time Decay" Phenomenon](https://learn.greeks.live/wp-content/uploads/2025/10/Assembling-Deconstructed-Anemometer-Elements-Reflecting-Cryptocurrency-Volatility-Surface-Dynamics.webp)

Theta increases exponentially in the final weeks before expiration, causing rapid erosion of extrinsic value.

### [How Does the Time Decay ('theta') Affect the Value of an Option's Premium?](https://learn.greeks.live/path/how-does-the-time-decay-theta-affect-the-value-of-an-options-premium/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Time Decay ('theta') Affect the Value of an Option's Premium?](https://learn.greeks.live/wp-content/uploads/2025/10/Modular-Derivative-Contract-Unwinding-Revealing-Stratified-Liquidity-Pool-Segregation-Mechanisms.webp)

Theta measures time decay, the rate at which an option's premium decreases as the expiration date approaches.

### [What Is the Difference between an In-the-Money and Out-of-the-Money Call Option for a DAO Seller?](https://learn.greeks.live/path/what-is-the-difference-between-an-in-the-money-and-out-of-the-money-call-option-for-a-dao-seller/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between an In-the-Money and Out-of-the-Money Call Option for a DAO Seller?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Volatility-Surface-Modeling-for-Decentralized-Option-Vault-Structures.webp)

ITM has a strike price below market (higher premium/risk); OTM has a strike price above market (lower premium/risk).

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