Though your question wasn't addressed to me, I'd like to provide some insight.
If you hold an option, time will be against you. Say you buy calls. If the stock does not go up as planned, you lose time premium everyday until expiration when time premium totally disappears. On the other hand, if you sell an option, time will be in your favor. If you sell puts, you profit by either the stock goes up or the stock goes sideway.
Moreover, the risk of holding and outstanding options are totally different. If you bought an option, you paid time and intrinsic premium for the right to buy/sell the stock at the indicated strike price. The most you can lose is the value of the option. However, if you sold an option, the opposite party paid you premium for your obligation to buy/sell the stock at the strike price. The most you can lose is, theoretically, infinite. You can potentially lose much much more than the amount of the premium you received.
Hope my post help you understand the risk and reward between buying calls and selling puts. |
