Sometimes, I find an option where the total time value of the option may be 5 cents(rest is intrinsic value) and there are about 15 days to expiry and theta is .08 (8 cents).
How is this possible. If it is decaying 8 cents a day, then in 15 days, it will lose 120 cents of time premium( and that is assuming a linear time decay, which is not true), but time premium is only 5 cents to start with. So total time decay can only be 5 cents. So how can it keep decaying at 8 cents/day for 15 days?
Please look at AAPL 102 call with underlying ~130, and the call is asking 28.05. So time value of this call is ~ 28.05 - (130-102) = 0.05
Theta is 0.0882. There are ~ 15 days to expiry. Today is feb 27