Option Selling- A Rich Trader's Game

In derivative segment, traders are more towards option selling instead of buying the options. They prefer to sell options.  The perception of option selling is that it's very easy to make money through it.
Somewhere it's true but it also have a various setbacks related to it. The only advantage of option selling is Theta decay because of which option sellers earn money. The profit of option seller is limited and is maximum to the premium received. The volume of option trading in India is highest among the world.

Why Option Selling Is For Rich?

Option selling requires high amount of margin for that you need to have a decent capital in your trading account. Option selling involves unlimited risk if done without hedging. When you sell option you receive the premium. You need to deposit the margin. Amateur traders generally do naked selling without any protection which leads to destruction of their trading account. In case the shortfall of margin occurs while carrying position due to any reason. There will be heavy penalty imposed by SEBI on the trader.

How To Do Option Selling?

Firstly, you need to understand never carry position for next day without any hedging in the market. While doing day trading follow the strict stop loss. Naked selling is done by smart money in the market. They know how to manage their risk and adjust their position under various circumstances in the market. The probability of profit in option selling is quite high. To do option selling you need to understand various aspects which requires a good amount of training and time. Option selling is an art without knowing it completely and doing it's like playing with fire. You will burn your hand either today, tomorrow or day after tomorrow so before doing it learn it.   

Option selling is a man's game not for boys.