How can theta’s absolute value increase as time to expiration decreases? Straight from a CFAI topic test question:

Q. If the price of GI stock approaches $75 over the next 30 days, which of the following changes in option parameter measures will most likely be observed?

Decreases in vega and the absolute value of theta

Increases in vega and the absolute value of theta

A decrease in vega and an increase in the absolute value of theta
Solution

B is correct. Typically, theta is negative for options. The speed of the option value decline increases, however, as time to expiration decreases. Vega is high when options are at or near the money. During the next 30 days, the options will approach expiration and approach being at the money.

Theta measures the value of the option dropping as time passes. If you are far away from expiration, theta may be close to zero because 1 day that passes with 90 days till expiration means nothing… As we approach expiration, absolute value of theta will increase because now its crunch time!

Most of the theta decay occurs in the last 30 days in which theta is increasing as the remaining time value of the option is decreasing.

Also some other general rules, for at the money option, theta increases as an option gets closer to the expiration date. Why? Because if its at the money, it’ll be worthless! On the other hand, for in the money & out of the money options, Theta decreases as an option is approaching expiration.