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The frequency with which traders attempt to trade options without having sufficient knowledge of the specifics of the many available methods is excessive. Trading options is not a game of chance and does not depend on one’s good luck. When it comes to trading options successfully, you need information, experience, and patience. Continue reading to find out why selling puts is the most profitable trading strategy for options, despite the fact that there are many different techniques for trading options available. Trading strategy for options can take many different forms, including a great number of fraudulent ones (which usually involve buying options). If you want to make money trading options, you should focus your attention first and foremost on selling option premium.

When you sell a call option, you are committing to write a contract that grants the buyer the option to acquire 100 shares of stock from you at the discount rate specified in the agreement. Because you are the one selling the option, the buyer will pay you an instantaneous premium. This premium represents both the time value and the inherent value of the option. Only contracts on shares that you already own can be written when you engage in the practice of selling covered calls. If you hold 300 shares, for instance, you have the ability to write three covered call options. When you sell a covered call that is out of the money, you are writing the contract at a strike price that is higher than the price at which the underlying stock is trading at the time. When a contract expires “out of the money,” it has no value and will not be exercised because it has run its course. You are going to be able to keep both the premium and the shares of stock that you currently own.

It is simpler than you might believe to generate revenue by selling options. It is one of the few trading strategies in which a trader can be incorrect about the direction the market is heading and yet come out ahead. However, selling options can be a difficult and complicated process.

Buyers of options experience gains and profits. When the Spot price is at or very close to the strike price at the time the option expires, the option is said to have expired “at the money.” As the buyer’s time on the contract comes to an end, the seller of the option collects the premium that was paid from the purchaser as revenue.