What usually happens to the price of options as expiration approaches?

As expiration approaches, the price of options typically experiences time decay, which is the phenomenon where the option's value diminishes as the expiration date nears. This occurs because the time having value is one of the key components of an option's premium. As time passes, the probability that the option will end up in-the-money decreases, especially if the asset's price remains stagnant.

This decay is not linear; it accelerates as expiration draws closer, particularly within the last few weeks or days. Therefore, the value of the option decreases more rapidly as the deadline approaches. Understanding this concept is crucial for option traders, as it impacts strategies involving the purchase and sale of options.