Debunking The Myth That 80% Of Options Expire Worthless
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Nearly all of Options360 trades come in a type of spread. I believe it’s crucial for positions to have some element of premium collection in order to generate consistent returns.
However, a persistent and pernicious myth regarding options is that 80% of all options expire worthless. The number belies the fact that most options get closed well before expiration, and can create a misleading belief that selling premium is the only way to make money trading options.
We’ve all seen the marketing emails and promotional literature touting 85% win rates, pushing the concept that selling options makes you “the house” in the great option casino analogy. While I firmly agree that there are distinct advantages to being a premium net seller, such as the time decay tailwind and a statistically higher probability of profit realization, I think those benefits must be kept in perspective.
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Category: Options Trading
