What Is the Relationship between Delta and Theta for OTM Options near Expiration? ▴ Learn

What Is the Relationship between Delta and Theta for OTM Options near Expiration?

For Out-of-the-Money (OTM) options near expiration, there is an inverse relationship between Delta and Theta. As the underlying price moves closer to the strike, Delta increases (moving towards 0.5), while Theta, the rate of time decay, is also high.

If the price moves away from the strike, Delta moves towards 0, and Theta remains high, as the option rapidly loses its time value.

How Does Delta Change as an OTM Call Option Moves Deeper OTM?

Does Time Decay (Theta) Accelerate or Slow down the Delta’s Movement toward 1.0 as an Option Moves ITM?

Explain Why Theta Accelerates near the Option’s Expiration Date

Explain Why Gamma Increases as an Option Approaches Expiration