One of the persistent and pernicious myths regarding options trading is that 80% of all of them expire worthless. The number relies on the fact that most options get closed well before expiration and can create a misleading belief that selling premium is the only sure way to make money trading options.
We’ve all seen the marketing emails and promotional literature that tout 85% win rates, and push the concept that selling options allows you to “become the house” in the great option casino analogy. While I firmly agree that there are distinct advantages to being a net seller of premium, such as the tailwind of time decay and a statistically higher probability of realizing a profit, I think those benefits need to be kept in perspective.
It’s true that… Continue reading at StockNews.com
Source: Option Sensei