The world of options trading is statistically very difficult, with a high failure rate and less then 20% of retail traders actually making a profit. An interesting thing to keep in mind regarding the options market, is that it’s a zero-sum game, meaning that for every trader who takes a loss, another trader collects a profit. If less then 20% of retail options traders are profitable and every time someone takes a loss, someone else makes a profit, then we can see that there is clearly opportunity within the options market.

It’s very easy to over complicate options trading. Many speculative traders make risky bets based off of chart activity and try to time price action. others use complex trading strategies and spend lots of time collecting data on their results for back testing purposes. While these approaches may work well for some traders, the statistics say that they do not produce good results for the majority of them.

We take a very simple approach to options trading. Our goal is to make respectable profits while mitigating the risk of substantial loss of capital. To achieve this, we primarily sell option contracts and typically avoid buying them. Option contracts gradually loose their extrinsic value over time as they get closer to expiry thanks to our Greek buddy named Theta. If we are able to sell an option contract for a high price and then repurchase it back before expiration for a lower price, then we profit the difference. It doesn’t always work out this way and there are definitely risks associated with selling option contracts, but, for us that’s what keeps it fun.

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