This segment of Market Measures compares the theoretical risk/reward ratio to the historical realized risk/reward ratio when managing early.
In order to balance our risk/reward ratio, we like to use management strategies, such as managing early. Yet, when we look at the theta/gamma ratio, this theoretical ratio suggests that holding to expiration is most profitable.
But the results for the historical realized reward/risk ratio suggest that around 20 DTE, the ratio decreases. Therefore, the theta/gamma ratio overstates the reward/risk ratio, and managing early is one way to have a better risk/reward ratio.