Do Option Sellers Have a Trading Edge?
John Summa, CTA, PhD and Founder of OptionNerd.com explores three key patterns that emerge from a recent Chicago Mercantile Exchange (CME) study:
- on average, three out of every four options held to expiration end up worthless;
- the share of puts and calls that expired worthless is influenced by the primary trend of the underlying; and
- option sellers still come out ahead even when the seller is going against the trend.
The data presented encourages traders to develop a selling strategy as a primary approach to trading options.
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