Theta represents one of the primary,that we like to position our portfolios to be profitable. By selling OTM options, we capture positive theta and are able to benefit from the simple passage of time. However, it is important to note that theta itself is not a linear function over time. In other words, the "value" of each of those days that do pass moves and changes, as we approach expiration.
In this Skinny, we take a look at the mathematical formula for theta, in an effort to better understand this non-linearity - specifically,. What we find is the radical that is front and center in the theta equation hints at the fact that its graphical relationship over time will indeed be either concave in nature.