Harry, I'm afraid it's you that's missing the point. If you had read my exchange with RR you wouldn't have.harryp said:TheBramble said:Not only obvious Harry, but quite unrelated to my comment.
However, I'm sure many will appreciate the basic math lesson.
One small correction though. Unless I'm mistaken, when 'windle sells premium' - it doesn't mean he's going short. He doesn't have to buy it back - it can expire worthless, which the majority do. He's already received his premium.
I'd be the first to acknowledge RR's superior knowledge in options. However, neither he, nor you have contested my position that selling options has a far higher probability of profit than buying them.
BTW - we're all way off-topic on this thread with this stuff and if anyone want to carry it on, I'd suggest the options forum would be a good place for it.
You're missing the point re the benefits of selling premium in a mkt where vol is steadily decreasing otherwise you would'nt have dismissed my original comment.
If windle is selling premium it means he is going short. The way in which the position is closed does'nt change anything [ if you short a ftse future do you have to buy it back ?]
You are wrong to assume that because most option expire worthless it is more profitable to sell options. [ you can have 5 losing trades , 1 winner ....... and still make a profit on the day.]
My position is that selling options has a higher probability of profit than buying them. Period
Yes, in selling premium you are effectivelty going short. But in a short trade in any other instrument, you are required, at some point, to cover by buying back.
With options, as the majority expire worthless, this is rarely required. You just keep the premium.
Your comments on selling premium in a market with decreasing volatility is already well understood. I wasn't dismissing it. I agree with it. Unfortunately in the context of my original comment, it has no bearing.