Buying Options vs. Selling Options (Risk/Reward, Probabilities & More)

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When trading options, there are two sides to every trade:

1) The Option Buyer
2) The Option Seller

What are the major differences between buying options and selling options as trading approaches?

In this video, I break down the biggest differences between buying options and selling options by comparing:

- Loss Potential and Profit Potential (Risk/Reward)
- How Each Approach Makes / Loses Money
- The Probability of Profiting from Trades
- Exercise and Assignment
- Margin Requirements
- Difficulties Associated with Successfully Buying Options & Selling Options

Be sure to leave a comment down below with any questions you may have!

=== RECOMMENDED VIDEOS/RESOURCES ===

[vkollur]

I have made at least 3 attempts to learn options in the last 3 to 4 years. Always found it confusing and always gave up. Set a goal 3 weeks ago to get out of this COVID 19 quarantine with working knowledge and understanding of Options trading. I found your channel yesterday and have a learnt and understood a great deal lot more than ever just in one day. I have lot more to learn and will be using your videos. The quality of your explanation of the concepts is extraordinary. Thank you for making this interesting for me.

[hardware]

Very nicely done. The one thing you missed when comparing selling vs buying options is the idea of adjusting and selling more time for a position to move in your favor. This is a key concept, since long options don't have this capability. Personally it tilts the options game in favor of the seller. Regardless very nice video. Thank you.

[philgiffney]

Great video! How do you talk for so long without blinking😳

[mobiusgrey]

Teaching well is being able to explain a complex subject in a clear and easy to understand manner for someone who has zero experience in the subject. This video absolutely nailed it 👍

[samapples]

thanks man i was getting very confused watching everyone else try and explain this concept 🙏

[GizmoGuy]

Question: What happens to options calls/puts, buys / sells in the middle of a stock split?

[eculpepper]

Great video, you are a very clear teacher, I need to learn more about tastyworks.

[vishalbhardwaj]

Excellent Explanation. Most Easy to understand Video on Youtube for Options. I was so confused for ITM Buy vs Sell and with this 20 min Video, I understood everything.. Thank you So much. Great Work. Keep it up!!

[cronos]

Great video! Could you please make a video about the expected movement of a stock base on its volatility at expiración thanks

[bitsnbots]

This gentleman is the best explainer in chief on the tube

[jjsiegal]

Good Video....thanks
QUESTION: *Why would you "sell a Call vs Buy a Put ???"*

[pradprad]

Fantastic lesson. Thanks for teaching us. This is the best teaching on options ever on YouTube

[EllieVogelEllieVogel]

Thanks for your thorough explanation and the graphics that explain the relationship between stock and option prices. This comparison of risk and rewards for calls vs puts finally brings clarity of when to do one vs the other. I love that you are not concerned with the theory or jargon but how it can be deployed for us newbies. Chris - you have put so much effort on your videos, I wan to thank you very much for all you have done. Do you have any where the sequence of videos recommended to grasp a good understanding of this field? I have been watching a few here and there but want to make sure to follow a comprehensive plan.
Again, thanks for everything! Great job!

[tinglegoblin]

Thank you. I started trading options recently and this helped with a question i had about buying puts.

[ericspecht]

Always explain things so easily 🙌🏼 I learn a lot from your videos

[diverdown]

Selling a naked option is like bunting with no infield...there is a damn good chance you are going to get a single. You won't get a homerun...but you are on base most of the time. However, if you're stupid you are OUT!

[rashmipatel]

I found your videos very helpful in learning -- thank you

[szhang]

I wish you could elaborate a bit more on the buy versus sell of PUT options.

[markbranscome]

I've got a simple question, but I just cant wrap my head around it! I'll tell you what I did and I can't figure out what to do at this point. Zynga stock. Not highly volatile. Bought a PUT with $12 strike when it was at $10.37. Currently it is trading at $9.97. My Position shows -$54.00. What does that even mean? And The option expires on March 19th. Can you help me understand what I should do?

[keatonlitzenberg]

I love selling options but I will strictly only do covered calls or cash secured puts. as for buying options it has been one of the best moves I’ve ever made in trading