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If buuying OTM options is a consistently losing strategy, the opposite would be selling OTM options. And that's a reasonable way to make money.
by unmole 5y ago
If buuying OTM options is a consistently losing strategy, the opposite would be selling OTM options. And that's a reasonable way to make money.
- JumpCrisscross 5y ago> the opposite would be selling OTM options. And that's a reasonable way to make money. It's the original "vacuuming up nickels in front of a steamroller" trade. It looks like it works well for a while until it doesn't. Option pricing has many degrees of freedom. Most result in value frittering away. As a result, most options trade participants lose money. (By design. It's a hedging tool.) The alpha bleeds into the underlying market through market makers' hedging.