Hey traders,
Yesterday we tackled the myth that options are dangerous.
I explained that options themselves aren’t dangerous. It’s all about how you use them.
I ultimately revealed that my #1 rule for using options safety is to sell them instead of buying them.
Today, I want to take it a step further and talk about why selling options is the real smart play.
I’m not talking about making those crazy, lottery-ticket-style bets you might see people doing online.
I’m talking about stacking the odds in your favor, and I’ll show you exactly why selling options gives you control.
Time Decay Is Your Best Friend
Let’s talk about something that works in your favor as an option seller: time decay.
You’ve probably heard me talk about this before, but let me give you a quick refresher.
Time decay — sometimes people will try to trying to sound fancy and calling it theta — is what happens when an option loses value the closer it gets to expiration.
Now, if you’re buying options, time decay is your worst enemy. That option you paid for could become completely worthless as the days tick by, and the clock is working against you.
But when you’re selling options, you’ve just flipped the game on its head completely — time decay suddenly becomes your best friend. Every single day, that option you sold is losing time value, and the odds are tipping more and more in your favor.
Here’s the best part: the stock doesn’t have to move in your favor for you to win.
When you sell options, you’re getting paid right out of the gate — as soon as you place the trade — and as long as the stock doesn’t move too far against you, you can still walk away with a winner.
It’s About Flexibility, Not Perfection
Here’s where a lot of traders go wrong. They think they have to be perfect when they’re trading options.
They’re buying options, hoping for that big move, and when the market doesn’t cooperate, they lose their shirts.
But when you’re selling options, you don’t have to be perfect. You’ve got room to be wrong and still walk away with a profit. The stock doesn’t have to skyrocket in your favor. It doesn’t even have to move that much.
Heck, it can even go against you a little bit, and you can still win the trade!
Think about it: Would you rather have a 50/50 chance, or would you rather have the odds stacked in your favor? I know what I’m picking every single time.
Why Selling Beats Buying in the Long Run
Let’s face it, most people get into options trading because they hear about the guy who made 500% overnight on some out-of-the-money call option. And sure, it’s exciting to think about hitting that home run.
But I’m not interested in home runs. I’m interested in staying in the game and making consistent money week after week.
And here’s the truth: depending on what statistics you believe, somewhere between 80% to 95% of options buyers lose money.
Think about that. That means the vast majority of options sellers are winning those very same trades. The numbers don’t lie. When you’re on the selling side of the trade, the odds are in your favor, plain and simple.
I’ve been doing this for nearly 40 years, and I can tell you one thing with certainty: The traders who last — the ones who build real wealth — aren’t the ones chasing home runs. They’re the ones stacking small, consistent wins over time.
That’s why I sell options, and it’s why I’ve been able to stay in this game for so long.
Trust me, once you understand the power of selling options, you’ll wonder why you ever bothered buying options in the first place.
Tomorrow I’ll share with you a simple way you can see time decay at work.
Right from your computer… in the privacy of your own home… without spending a single penny. Stay tuned!
Trade well,
Jack Carter
P.S. Guessing… that’s what the financial media does half the time. And that goes double for whatever they’re writing about next week’s Fed meeting.
Luckily, Nate Tucci isn’t guessing… He’s preparing to harness the volatility that the Fed meeting will bring to markets — no matter what they announce. Check it out now.
