Best timeframe for sellings cash-covered puts?

[CyJackX]

I want to sell volatility in a relatively conservative way and don't mind ultimately holding the underlying SPY. I just noticed that obviously premium doesn't scale with time in a linear fashion; what is this curve called, and where can I observe where it is steepest, and thus would profit most from time decay? Thanks.

My ultimate plan will be to alternate selling covered options if assigned...the downsides I can see being whipsawed and being assigned at alternating losses, and if I keep my strikes in profitable or neutral positions I may never get reassigned (and I'd like to wind up just holding SPY eventually.)

 

[tommcginnis]

If you google Option Theta [images], you'll notice the startlingly linear behavior of OTM theta over time. Other than that, I can't make out much more from your question.

 

[CyJackX]

If you google Option Theta [images], you'll notice the startlingly linear behavior of OTM theta over time. Other than that, I can't make out much more from your question.

I was always under the impression that theta accelerated closer to expiration?

 

[tommcginnis]

I was always under the impression that theta accelerated closer to expiration?

ATM, it is a monotonic curve concave to the origin. (Like the path of a wad of paper thrown horizontally.)
OTM ends *convex* to the origin -- think of the jumps in IV that manifest in way-way OTM strikes.

Plotting OTM v ATM looks like a fat knife edge, tilted {left} for sharpening against the horizontal {time} axis.

A picture being worth a thousand words: just found this one...

 

[CyJackX]

Cool. So, the gist of my question is locating the specific beginning of the curve for ATM...if I sell puts there, they're at the point where they'll begin to decay faster.