"is it possible to Sell the option when the underlying asset is not at the strike price yet (if not how does day trading work)? "
Yes. You can buy, sell anytime you want as long as there is a buyer/seller willing to buy the options from you and it is during market hours. (options market only operates during market hours 9:30 - 4). Some stocks are thinly traded so it is harder for your broker to find willing buyer/seller to offload your options for you. But MSFT is an actively traded stock, so you shouldnt have any problem.
"for instance, say MSFT is at $30.5, does that mean that the option is now worth $.70? "
if your delta is correct: .40, then yes, your options should worth about .70 cents. but sometimes a certain options is worth more if it is TOO actively traded due to high demand.......this extra value is called the speculation value. Also, you need to look at the erosion value. Options value erodes as it goes nearer to its expiry date. i think this erosion value is called gamma.....cant remember. but as long as your options is more than 2 weeks before it expires, i dont think you should worry.
"Can i buy/sell according to the price of the underlying asset, no matter how small the gain is. could i make a limit order to sell when the underlying asset reaches my specific price? "
Yes definitely. but you really have to figure that out yourself and get familiar with your trading platform because different brokers have different platforms that works differently.
"What if i want to sell my option when MSFT gets to $30.84, how would i configure how much my option now is. how do day traders make a profit from just a few cents increase, and how do they configure their stop/limit orders? what would my order be when i sell my options (a sell to close; put option)"
By calculating using delta, you can make a rough estimation on how much the options is when it hits certain value. but at that point in time, you should be able to check the current value of the option from your trading platform. I use thinkorswim....it is under Trade monitor tab. Day traders usually trades high volumes (many options contract) at one time and they do this over and over again in a day. Again, configuring how to put stop limit orders is basically getting yourself familiar with your trading platform. Dont your platform have a "live support" that can help explain all this?