An Option Buyer has the potential for UNLIMITED profit and the loss is LIMITED.
An Option Seller has the potential for LIMITED profit and the loss could be UNLIMITED.
Normal choice should be LIMITED LOSS, UNLIMITED PROFIT kind of a deal.
Not in the world of Option Trading.
Here we have got so many theories and strategies going around that Option Buying is ignored completely.
We avoid what is absolutely simple and look for profits through what is complicated.
In our quest for avoiding a loss, we avoid the profit also.
Well, that is a choice. No argument with that. Even I am not beyond that. After all, I am known for Money In The Bank strategy which involves option selling. I am doing spreads too which include selling options.
But, Option Buying deserves an unbiased look. Not through the coloured glasses of option writing. And the results are refreshing and surprising.
I did the numbers for last 130 months ( more than 10 years ) of Option Buying in NIFTY CALL options.
NIFTY deep in the money CALL ( about 5% ITM ) bought every month at the close of previous series expiry and then just letting it close with either a profit or loss while DOING NOTHING would have yielded these numbers.
NIFTY has moved from 4646 to 17736 (13090 points) in this period.
ITM CALL option buying captured 7605 points out of this NIFTY gain.
59 out of 130 months ended up with a profit.
And yet, people say that Option Buying does not make money.
130 months is a long period. I could go back another 10 years and prove it again ( In fact, it was done in my second book ) still the traders will not believe it. The bias against Option Buying is so strong.
For the complete story, read my books:
In Paperback Edition:
Enjoy the holiday and the Sunday reading.
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