Part 10 Trade Like Institutions

Option Buying vs. Option Selling

Option Buyers have limited risk (premium paid) and unlimited potential profit. However, time decay works against them as Theta reduces the option’s value daily.

Option Sellers (Writers) have limited profit (premium received) but potentially unlimited risk. Sellers benefit from time decay and stable markets.

In the Indian market, most professional traders and institutions prefer option selling due to the high success rate when markets remain range-bound.