Buying vs Selling: The Great Debate
Should you be an Option Buyer (Directional) or an Option Seller (Non-Directional)?
Option Buying (Long Option)
Pros
- Low Capital: Start with as little as ₹5,000.
- Unlimited Reward: Can turn 2x, 5x, 10x in a trend.
- Limited Risk: You only lose the premium paid.
Cons
- Time Decay (Theta): Works against you.
- Low Probability: You need to be right about Direction AND Timing.
Option Selling (Short Option)
Pros
- High Probability: You win if market goes your way OR stays flat.
- Time Decay (Theta): Works FOR you. You get paid for waiting.
- Consistency: Easier to generate steady income.
Cons
- Unlimited Risk: If market crashes against you, losses can be huge.
- High Capital: Need ₹1 Lakh+ per lot (without hedging).
The Verdict: Most professionals are Net Sellers (selling with hedges). They use buying only for hedging or strong momentum scalps. AlgoStraddle is designed to help you spot those Momentum moments for buying or Range-bound moments for selling.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.