The biggest reason and one of the prime reasons is the theta decay.
Option sellers always have an advantage because the as time passes, the option premium falls even if the underlying instrument doesn't move.
BENEFITS OF OPTION SELLING
Most of the successful traders here are option sellers.
Ever wondered why?
Why we have chosen option selling?
How to decide what strategies to use?
THIS IS THE ONLY THREAD YOU'LL EVER NEED!
Find out below
The biggest reason and one of the prime reasons is the theta decay.
Option sellers always have an advantage because the as time passes, the option premium falls even if the underlying instrument doesn't move.
We as option sellers can be wrong with our market view and still end up making money because of the power of theta decay and adjustments to some extent,
Option selling also enables us to take a directional view. Infact, directional view along with theta decay makes it a solid combination.
Debit spreads and credit spreads works great for a directional view.
We can make money in option selling even if the market doesn't move as the otm options will go to 0 with the help of theta decay. It's the most fascinating thing.
Option selling has extremely low transaction costs as compared to futures and other instruments.
The STT which has to be paid in option selling is drastically low making it an excellent option for many.
Hedging is an excellent tool in option selling. It protects you from losses and also makes you more money than the original trade itself in some cases.
Hedging also makes sure you stay in the trade and prevents you from being thrown out in small spikes.
Usually naked option carries unlimited risk.
But hedging your risk ensures limited risk on your positions.
You can also deploy limited risk strategies which protects you from any big spike and also big gaps.
Option trading is all about trading volatility. Option selling can be used to take advantage of rising and falling volatility.
Best strategy for falling volatility : Strangles, straddles, iron condor, ironfly, butterfly.
Adjustments is the heart of option selling.
The ability to adjust your trades and coming out in profit even when your view goes wrong is one of the prime reason why option selling is amazing.
Adjustments can be done in "n" number of ways as per one's style.
Option selling requires very low margin as compared to futures because of hedging. You can also make your option selling position behave like futures by going with itm options, although I personally don't recommend it to newbies.
In option selling,you can play ALL directions
If you're bullish you can play long, If you're bearish you can play short and if you think the market will be rangebound, you can deploy neutral strategies
The flexibility it offers is unmatched!
Close to 80% of the options expire worthless. So the probability is always on your side.
You don't have to be intelligent to make money. Only trade the most high probable setups and you're good to go.
Option selling is an amazing tool for making consistent returns and compounding your money at a decent pace with least drawdown.
You just have to make 2% a month.
Often buying options, futures, etc has a problem of scalability.
But selling options can be done at a scale! It can be done with huge capital and there's seriously no limit as to how much capital one can scale!
Option selling is not only used for trading but also for hedging your long term investment portfolio.
Covered calls is an excellent way to collect premiums from option selling as long as your stock is flat/going down and bring down the average price.
Cash secured puts is an amazing way to buy stocks at your desired price provided you have enough cash to take the delivery of the stock.
Option selling requires patience by default since it doesn't give you money instantly like other instruments.
It cultivates the habit of patience and also makes you less prone to take unnecessary risks.
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Funny, before the election I recall lefties muttering the caravan must have been a Trump setup because it made the open borders crowd look so bad. Why would the pro-migrant crowd engineer a crisis that played into Trump's hands? THIS is why. THESE are the "optics" they wanted.
This media manipulation effort was inspired by the success of the "kids in cages" freakout, a 100% Stalinist propaganda drive that required people to forget about Obama putting migrant children in cells. It worked, so now they want pics of Trump "gassing children on the border."
There's a heavy air of Pallywood around the whole thing as well. If the Palestinians can stage huge theatrical performances of victimhood with the willing cooperation of Western media, why shouldn't the migrant caravan organizers expect the same?
It's business as usual for Anarchy, Inc. - the worldwide shredding of national sovereignty to increase the power of transnational organizations and left-wing ideology. Many in the media are true believers. Others just cannot resist the narrative of "change" and "social justice."
The product sold by Anarchy, Inc. is victimhood. It always boils down to the same formula: once the existing order can be painted as oppressors and children as their victims, chaos wins and order loses. Look at the lefties shrieking in unison about "Trump gassing children" today.
Funny there are those who think these migrant caravans were a FANTASTIC idea that's going to take the immigration issue away from you.
— Brian Cates (@drawandstrike) November 26, 2018
Like several weeks watching a rampaging horde storm the fences & throw rocks at our border patrol agents & getting gassed = great optics!
This media manipulation effort was inspired by the success of the "kids in cages" freakout, a 100% Stalinist propaganda drive that required people to forget about Obama putting migrant children in cells. It worked, so now they want pics of Trump "gassing children on the border."
There's a heavy air of Pallywood around the whole thing as well. If the Palestinians can stage huge theatrical performances of victimhood with the willing cooperation of Western media, why shouldn't the migrant caravan organizers expect the same?
It's business as usual for Anarchy, Inc. - the worldwide shredding of national sovereignty to increase the power of transnational organizations and left-wing ideology. Many in the media are true believers. Others just cannot resist the narrative of "change" and "social justice."
The product sold by Anarchy, Inc. is victimhood. It always boils down to the same formula: once the existing order can be painted as oppressors and children as their victims, chaos wins and order loses. Look at the lefties shrieking in unison about "Trump gassing children" today.