Put vs Call
Advantages of Option Buyers
by #🧔PRSundar
| No | Option Seller | Option Buyers |
|---|---|---|
| Buyer Advantage 01 | Huge margin money. | Pay little premium money. |
| Buyer Advantage 02 | Unlimited Risk | Limited Risk |
| Buyer Advantage 03 | Limited Reward | Unlimited Reward |
Trivia
- In Singapore, Nifty is traded. SJX Index.
- No a single option is traded in Singapore. ( FIIs, No buyers, everyone is a seller.)
- In Singapore everyone is a seller.
- In India 90%, sold are options.
| No | Option Seller | Option Buyers |
|---|---|---|
| Seller Advantage 01 | Need not pay anything as CASH, if they have collateral. | Has to pay money as CASH. |
| Seller Advantage 02 | All additional money made is profit | Has to pay upfront |
| Seller Advantage 03 | Losing everything is only probability. | Losing many times one can go bankrupt. |
| Seller Advantage 04 | 80% probability of wining, only lose if market goes violently high. | Only 20% Probability to win. Only when market move violently higher. |
| Seller Advantage 05 | Since profit is limited, greed does not comes to play. either limited profit or stop loss will get hit. | Buyers has difficulty in booking profit as don’t know when to end. |
| Seller Advantage 06 | Either have lot of Money or extraordinary Skill. No other way to make large money. | Limited Risk, Unlimited profit is improbable. eg: Lottery Ticket 🎟️ |
- On expiry day, its extremely volatile.
- Probability of Profit⬆️ -> Risk Involved⬆️
- Probability of Profit⬇️ -> Risk Involved⬇️
- Either money or skill can make more money.
- Probability of option seller winning high.
🏷️Tags : #Investments💷/Options-Trading🎛️