Let me bust one huge myth about option trading

I hear so many things that drive me completely nuts! Here’s one of them.

I hear all the time that people should only sell options never buy them.

They give the reasons that 70% of options expire worthless and selling options must be the best way to make money because that is what the professionals do.

Actually both reasons are correct:

Most options expire worthless
Market makers, not all professional, tend to be short options

But the conclusion is absolutely wrong! Let me explain.

Most options expire worthless because they only add strikes when the price moves a lot. That means that there are more options that expire worthless than in the money. But the gains and losses of the longs and the shorts are equal!

Remember that the maximum winning trade for an option seller is only the premium but the buyer of options has “unlimited” profit. So what happens is that option sellers have a higher number and percentage of winners but the average winner is small and the average loser is big. Option buyers are the opposite. They win on less than half their trades but the average winner is much larger than the average loser.

But the net net. Exactly the same. No difference between buyers and sellers.

But option market makers are usually short. Absolutely true.

As a former option market maker, I think I was basically short options all the time! Including the Crash of 1987!

But I was short because the average customer is a buyer of options. So I just do the opposite of the my clients. If they wanted to sell options, I would buy from them. But they mainly wanted to buy so I was mainly a seller.

I didn’t care if they sold or bought from me. I just wanted to buy at the bid and sell as the ask.

Most people believe myths like this and, guess what, most option traders are losers.

One way to become a winner is to subscribe to my Options Navigator program. I show you all my actual personal trades. Trade along with me! Look over my shoulder!

You can get more info by clicking here.

Then just enter your contact info.

Thanks!

Good trading,

Courtney

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