Any studies on who normally wins - option writer versus purchaser?

Discussion in 'Options' started by Saltynuts, Feb 25, 2018.

  1. I think most people who discuss options on ET don’t trade options. SMH ‍♀️
     
    #21     Feb 25, 2018
    Spooz Top 2 likes this.
  2. I think everyone kind of knows already that selling options, and collecting that instant insurance premium, is generally much more safer and secure and steady...

    Rather then the game of buying options on a property or entity, and hoping to expect to predict the future movement/volatility/explosion of it.

    Again, it all falls on that classic Risk vs Reward spectrum.
    I can say though...trading options...is Way more profitable, rather then selling them for a relatively measly profit.
    It's certainly more difficult to trade options, but insanely way more profitable -- if you're able to, o_O

    I bet most people on this ET site would give their left nut to be able to trade options successfully and fruitfully.
    Each trade, or win, feels like a tiny...mini lottery windfall. -- it's better than drugs or sex or alcohol or Sweet and Sour Beef.
    2018 Holy Grail Trading Academy, Millionaire Money Machines...a never-ending Waterfall of Cupcakes, and Steaks
     
    Last edited: Feb 25, 2018
    #22     Feb 25, 2018
    spindr0 likes this.
  3. Not using margin. Not writing.
     
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    #23     Feb 25, 2018
  4. gkishot

    gkishot

    Why not? Buying calls is profitable in an upward trending market. So is selling puts.
     
    #24     Feb 25, 2018
  5. spindr0

    spindr0

    Here's a common option arb. An option market maker executes a conversion or a reversal in order to arb the difference. The counter parties bear the risk. My logic is that like the market maker, the insurance company is selling something for more than it costs, in terms of payout on either side.

    Buying OTM puts is another story. Nothing you don't already know but long puts are like collision on your car or home insurance or even your health. If you want a smaller deductible, you pay more. If you want a lower premium, your deductible is higher. But any way you cut it, it's an out of pocket expense (unless you're clever enough to collar your position :) and that's a significant drag on performance. It's equivalent to buying calls and in both cases, it only works if the underlying cooperates. I have no clue how that equates to being the insurance company.
     
    #25     Feb 25, 2018
  6. spindr0

    spindr0

    Selling option premium is income. Dividends are not since they are yield not total return (stock exchange reduces share price on ex-div).
     
    #26     Feb 25, 2018
  7. If you can find it read the original BS model article. Theoretical value is an indifference price for a given volatility. That means with an infinite number of repetitions - you wouldn't care.
     
    #27     Feb 25, 2018
    nbbo likes this.
  8. spindr0

    spindr0

    I don't think so about better than sex but it might be one of many things where it's the most fun that you can have with your clothes on!

    String together a lot of those mini lottery windfalls and you generate a lot of feel good "Dolphins" :D (sic) in your brain.
     
    #28     Feb 25, 2018
  9. True for 99.9% of things discussed here.
     
    #29     Feb 25, 2018
  10. ehsmama

    ehsmama

    The one who is smarter and who has done his or hers homework properly wins. I only buy options for a living and it works handsomely for me..
     
    #30     Feb 25, 2018