How Does the Time Decay (Theta) of an Option Benefit the Seller?

Time decay, or Theta, is the measure of how much an option's value decreases each day due to the passage of time. Since the seller (writer) receives the premium upfront, the decay of the option's value benefits them.

As the option loses value, the seller's liability decreases, making it cheaper to buy back the option to close the position or increasing the probability that the option will expire worthless, allowing the seller to keep the full premium.