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Dan Ganancial
Dan Ganancial
Strategic Marketer | Leader & Advisor | Options Trader
Published Apr 2, 2023
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Options trading has gained in popularity and interest the past few years due to the insatiable appetite of retail traders for buying options. However, buying options may not be the best strategy for retail traders. Selling (aka "writing") options has been a favorite strategy of professional traders for years because the odds favor a winning trade when selling options versus buying options.
As a retail trader, wouldn't you want to increase your odds of placing winning instead of losing trades? Selling options can be a profitable strategy for retail traders and investors, and here are ten reasons why selling options can be better than buying options.
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In conclusion, the option seller has a higher probability of success than the option buyer in placing winning trades. Furthermore, professional traders prefer the strategy of selling options versus buying options because the odds favor that strategy. Retail traders should take a lesson out of the professional traders playbook and look towards incorporating option selling as a bigger part of their options trading strategy.
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8 Comments
Richard Lanning
Utah- Life Insurance Licensed and soon to be in more states
2w
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Good ol theta decay
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Ravisankar Mayakrishnan
Internet Entrepreneur | Founder of NSimha Software Solution
6mo
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yes it's true now days i make profit option selling
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Vahan Janjigian
Chief Investment Officer at Greenwich Wealth Management, LLC. No artificial intelligence added.
1y
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Excellent article. I agree that option selling is better than option buying. Just a couple of small points: First, retail investors should never sell naked calls. It's much too risky, especially if the company announces good news when the market is closed. Second, I'm not sure option selliing can be used as a hedging strategy. I think of hedging as a strategy that reduces the probability of loss. Selling covered calls generates income, but it reduces the probability of gains if the stock goes up and the stock gets called away when the market price is greater than the strike price. Selling puts also generates income, but obligates the seller to buy the stock if the stock price falls below the strike price. In this case, the investor may have been better off buying the stock at the lower market price. In any case, this is an excellent article that retail investors should read.
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Parag Wasnik
P & L | Operations | Retail | FMCG | Consumer Durables | International Business | Business Transformation| CEO
1y
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Good Article
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