As our markets are becoming mature, the
number of option writers is increasing. It is believed than generally 80 % of
option buyers loose money so what should we do..Option writing is other way
round..
Option writing or in other words option selling
means to sell option call and puts for a premium.
But while option selling can be a
powerful way to diversify into a non-correlated, non-directional strategy,
there is no free lunch. Writing options is one of those strategies that is easy
to understand but infinitely more difficult to master.
Experience shows, however, that not doing the wrong things will
have as much, if not more, an impact on your portfolio’s ultimate performance
than doing all of the right things. Therefore, we can learn a lot from the
errors of others. To that end, we’ll explore the three biggest mistakes that
option sellers make and, more importantly, discuss simple ways to avoid making
them.
