Whether an options writer or buyer has better edge? Why?

Discussion in 'Options' started by OddTrader, Jul 2, 2009.

  1. Do you think whether an options writer or buyer has better edge in the market?

    What are the main reasons or conditions, and why?
  2. Writer.

    Buyer must be right on direction, timing, and size of move.

    Because write can lose large amounts on occasion, writer should hedge the option sale.

  3. dcvtss


    I disagree. There is no inherent edge in either strategy.
  4. Isn't there a large body of work which suggests "Option Sellers win 80% of the time, Option Buyers win only 20%?"
  5. Name a fund or trader who has beating the market over a 20 year period, writing or buying options... can't do it.
  6. 1) For the sake of "debate", the buyer.
    2) The seller must also be right on lack of direction, timing, lack of large price moves and volatility contraction.
    3) Sellers tend to earn lots of smaller profits and occasional large losses. Vice versa, buyers can tend to have lots of smaller losses with occasional large profits.
    4) Writers have the possibility of margin calls that buyers do not. It is something to take seriously.
    5) Personally, I prefer the short-side about 80% of the time. :cool:
  7. Since I "short" about 80% of the time AND go "long" the other 20%, that means I win all of the time! :cool:
  8. just21


  9. BINGO!!
  10. #10     Jul 2, 2009