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Hi, you are forgetting about timing the purchase of protective puts or buying back the options you have written at a profit.
by icu 13y ago
Hi, you are forgetting about timing the purchase of protective puts or buying back the options you have written at a profit.
- throwaway13qf85 13y agoIf the price moves against you (down if you have written a put, up if you have written a call) then you never get the chance to buy the options back at a profit. You might get a bit of theta decay, but equally any large moves will tend to kill you on the gamma and vega. As I said in another comment, writing options covered or not is basically a bet against volatility.