Adam's new book, "Irrational Together: The Social Forces That Invisibly Shape Our Economic Behavior" (University of Chicago Press) Investopedia Buy or Sell Options? Which Is Better?
: Generally lower (less than 50%) . For a buyer to win, the stock must move significantly and quickly in the right direction to overcome the cost of the premium and time decay.
: Your risk is strictly capped at the premium you paid . Even if the stock crashes to zero, you can't lose more than your initial investment.
: Theoretically unlimited for call buyers, as there’s no ceiling on how high a stock price can go.
Selling an option (also called "writing") means you take on the to trade if the buyer chooses to exercise their right.
