What is this options trading strategy called?

lawrence-lugar

Active member
140 22
It is often said that professionals sell options and amateurs buy them. This is not true 100% of the time, but it is certainly true that professional option traders know when it is appropriate to employ a given strategy. Option sellers write the option in exchange for receiving the premium from the option buyer. They are expecting the option to expire worthless and, therefore, keep the premium. For some traders, the disadvantage of writing options naked is the unlimited risk. When you are an option buyer, your risk is limited to the premium you paid for the option. But when you are a seller, you assume unlimited risk.
That's true, but you can make way more buying options -- specially volatile weeklies:devilish: . You won't get rich writing/selling options for the premium, but it's a nice small income generator.
 

TWI

Senior member
2,527 252
Whether a buying or writing is the best option is dependent on volatility or rather how volatility is changing and if you do not understand that and hence how gamma and theta are related then naked options are not for you.
 

apau

Member
63 4
I can't see this message either, but I agree with the guys here.

I write strangles on the ftse for a nice income per month and then do the odd ftse equity option.
 

kbaker9247

Newbie
7 1
Selling or Buying

Money can be made both ways. It's generally best to implement buy strategies when volatility is low and sell strategies when volatility is high. I traded a retirement account from Nov 2008 to Nov 2009 and turned 8,000 into 27,000 selling cash secured puts.
 

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