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The Time-Decay of the Value of Call Options

The following picture is the surface of the evolution (decay) of call-option price as expiration time approaches. Expiration occurs at the origin (intersection) of the Time-axis. The stock price determines how much the option will pay at that time (the option payout).

As expiration approaches, the value of the call approaches the payout. This approach is not linear, however. As you see, it is mostly accelerating, and most pronouncedly so when price is near the strike price. The approach of the call's value to the payout is decelerating only for very low stock prices, where the call is way out of the money.

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See all the 3D graphs together