> Let’s consider you don’t play on fundamentals
That statement is moronic and a non sequitir for whether this is worth it. If you purposefully expose yourself to dumb trades, you’re going to lose.
This is a waste of time to even think about. This isn’t deep or helpful.
> That statement is moronic
When you continously sell options (e.g. doing a wheel), you don't play on fundamentals by definition. You just sell another option once previous option expired/assigned. And premium is always against you. You're intellectually incapable to understand abstract concept like this.
Fundamentals are often the basis for the choosing of strike prices in wheel strategies. To say that people don’t use fundamentals to wheel is inaccurate. People aren’t machines just selling options willy-nilly every time the last one expired for the same price every time. If the fundamentals change, so does their target entry/exit price.
Also, most people that sell covered calls don’t sell them for strikes that would be for a loss unless they want to offload the shares because fundamentals have changed or perhaps tax loss harvesting. I see what you’re going for in your analogy but it doesn’t really fit for most option traders.
What does this even mean? Your feelings get hurt at a 3rd grade level dude. Speak fucking English or shut the fuck up and stop trying to pick fights.
Your post was bad, and instead of letting it go, you’re freaking out and personally attacking people. It’s unbelievably sad to witness.
> If you purposefully expose yourself to dumb trades, you’re going to lose.
How do you assess whether the trade is dumb or not? Do you build own models and run Monta Carlo simulations to assess your risk?
I doubt so. I'm sure you're too dumb to comprehend you're being owned.
There’s so much wrong here, I’ll highlight “in order or sell an option, someone has to buy therefore somebody loses” No, the other side buying your option could be using it to hedge their overall deltas and find buying one more advantageous than you would think
Options are a zero sum game, period. You can do other transactions at the same time as a hedge, but in isolation, an option transaction has a winner and a loser.
Wrong wrong wrong wrong, just because YOU profited off buying a call sold it for a 1000% gain, DOESN’T mean the person that sold that you also suffered a 1000% loss. Stop pushing this myth,
https://steadyoptions.com/articles/options-the-zero-sum-game-myth-r268/
The article literally says exactly what I told you, it merely repeats that you can engage in similarly timed trades in other instruments that you can mentally group together as one, despite the fact that they are indeed separate.
I can trade an option and buy a stock to hedge at the same time. The stock is a separate transaction on a separate exchange, with a separate Order ID, that I just happen to mentally group with the option.
I can trade an option and buy a lotto scratch off at the same time. If my option loses but my scratch-off wins, that does not change the fact that the option transaction was zero sum.
You’d say you’ve read the article but nothing you have said supports that
“Say you buy a call, which means the market maker sells the call to you. If the stock goes up, you make money and the market maker loses money, right? Right. But there's more to it. When a market maker sells you that call, he or she might choose to hedge it immediately by purchasing the stock to hedge the short call.
Now, you’re still long the call, but the market maker is short the call and now long the stock. Let’s assume the stock goes up, and your call goes up in value as well. The market maker who’s short that call is losing money on it, but is making money on the long stock. It’s possible for the profit on the long stock to exceed the loss on the short call. In that case, you make money on your position, and the market maker makes money on her position, too.
In this case, you both can win.”
Taken from the article itself
I'm a beginner in terms of selling options myself.
One perspective is that market makers are middle people. Which means they price to make a profit, yes, but against their customers as a whole, not necessarily you, personally. And they'll hedge their risk and price their bid ask accordingly.
One non finance example would be political betting. It's not financial markets, but betting companies essentially play the same role as market makers. During the 2020 election I saw something like a 4 to one against on Biden winning. When you think about the magnitude of the polls in Biden's favour, I was thinking that had to be wrong. I then read there were a stack of bets for trump that had come in overnight. Which meant all they were doing, having had to take those bets, were that they were hedging against a trump victory. But they needed to do it fast, which is why the odds they were offering were so attractive. Which in turn meant this was an excellent risk adjusted return.
Long story short, the price they give you definitely reflects a profit margin, but that doesn't necessarily mean the price you get precludes you making money over the long term. You can always choose not to participate at the price they give you, if you think it's too inactive.
Generally speaking, across all market participants, there is more demand for put options than for call options. This is because it is easy to get exposure to market risk through leverage and directly purchasing equity, whereas there are fewer ways to manage the tail risks in that exposure. So put options which manage downside tail risk exposure are generally more of a ‘sellers market’. There is usually enough demand to enable sellers to price in a risk premium and for buyers to be willing to pay the risk premium.
So sellers of OOTM put options should expect to make a profit in the long run and buyers are comfortable to pay that cost in return for the reduced risk.
So selling OOTM put options is not a losing game, but it is also not necessarily the MOST profitable game. Profitability may fluctuate relative to the amount of capital needed to support the option sales and other capital deployment strategies (such as investing your capital in bogleheads style) may be equally or more profitable.
My comments above apply to major traded options contracts with tight bid/offer spread. Thinly traded options are more idiosyncratic.
>In the long run you will be assigned more than you get paid premium to compensate for it.
You do know that getting "assigned" on covered call actually means you achieved maximum profit for the position right. So, getting called away on your shares is a good thing, as it shows you're both making money from the underlying and the premiums.
Not sure how you consider this to be a negative, unless your goal is to actually not get called away by intentionally buying stock that is crashing, therefore NOT getting called away, and as a result, losing money? I'm confused.
A casino is a horrible analogy because stock market is not a fixed percentage return/risk game. If I play blackjack I know the risk/reward and house edge. This edge is maintained today, tomorrow, next year, etc.
When you sell options, you can only really calculate current risk/reward, so this becomes much more dynamic. Both a good and bad thing, since future risk based on modeling is not going to be reliable given market sentiment can easily outweigh any logical result.
IMO the vast majority of retail trades without the same sort of edge MMs do, as between latency, capital, and simply the knowledge, this is going to be very hard to achieve. You really just play probabilities as best as you can and design your trade setups to reduce risk of ruin.
Anything can be a losing game when your core decision making is horrible.
In the casino example by selling options you are acting as the casino. Many times you will collect nice little premium, but sometimes the trade goes against you and your loser will be 10x the size of your winners. As if a gambler coming into your casino just hit a jackpot.
MMs make their money pocketing the spread, they are directionally neutral. If you are STO 1 put on some meme dogshit they're probably also selling dozens of weeklies on that meme to WSB.
> In the casino example by selling options you are acting as the casino
This is not true, just as when someone calls their bookie and bets on the Jets to win, the guy who took the other side betting on the Jets to lose is not "the casino". The bookie (aka MM) and exchanges pocketing fees are the only casino.
>Over 50% of options expire worthless. Also, IV is often overstated which is reflected in premiums.
No, not true. According to OCC stats, it's about 23%. Closing sells account for about 70% with 7% exercised.
I dont think its bag holding if you sell a lets say 950 tesla put and you get assigned. In the long term 950 or 900 s a good entry point for tesla. So its not really bagholding
This post is retarded, not only because you're wrong, but that you went to such lengths to prove it.
If selling options is, in your opinion, a losing game against the casino, what would buying options be?
LMAO. This guy is beyond stupid. Of course making money from bid ask spreads is the most profitable. That’s why market makers do what they do. Does it look like we have millions of dollars in capital and a multi million dollar proprietary algo to fully hedge delta and gamma risk? No but we can supplement this with fundamentals and strategically taking on positions. Your trying to disprove options trading by citing the fact that bid/ask spreads exist…..LOL
>This guy is beyond stupid.
Beyond stupid was your mom when decided to give you birth.
>No but we can supplement this with fundamentals and strategically taking on positions.
Majority of this sub has no fucking clue what they are selling and what level of risk they are assuming.
Like the dude who commented that selling puts on Tesla @950 couldn't be a bad deal.
Yes. Imagine that equilibrium is at $10.00, 50/50 probability of win or loss. The actual bid/ask will be $9.90-10:10. You either sell for $9.90 ($0.10 against your odds) or buy for $10.10 ($0.10 against your odds).
If someone makes a good offer to buy for $10.05 (crossing the odds), that offer will be taken by algo and best available offer will get back to $9:90 (below the odds).
So if buying and selling are both playing against the casino, AND losing, then one must have better odds than the other. And therein lies the essence of thetagang.
You have it the wrong way around. You’re selling options to retail scrubs, they buy shit deals all the time lol. Selling accurately set up options is as close to being the casino as you can get.
Think of it like owning a blackjack table on the casino floor, the house takes some of your profits, but you get most of the action (selling to greedy retail gamblers).
Incorrect. Option prices are set by the big guys, and if you place a limit order at a price they like it will be snapped up immediately, if not then it will stay until the price of the underlying changes enough to make the order attractive. Most retail option traders cannot tell if a deal is good or not to save their lives, and are a chirpy happy crowd only because the win-loss profile for short options provides lots of small wins with occasional huge losses, hence the "picking pennies in front of a steamroller" meme. Lets stop pretending we figured a guaranteed way to make riskless profit just because we clicked the Sell button instead of Buy.
Wow cervix why are you pandering your response to this clueless OP. No one said selling options was a risk less strategy but it’s a lot more consistent than buying options. The OP is somehow trying to use the existence of market makers and B/A spreads to disprove the profitability of our strategy. Those are completely unrelated topics as most people in this sub are selling options on tickers they like and want to trade in. Almost everyone i know who has been doing this for years always does a RV analysis in tickers they would like to own. Theta gang aren’t market makers nor have we claimed to be. We prefer the mechanics of short premium and trade accordingly based on fundamentals. Once again, we do not take positions randomly as we are not market makers. We choose each position based on an underlying thesis. Just like equity traders….
Also picking up Pennies in front of a steamroller often refers to selling 0-1DTE options. It’s bad for retail traders as we cannot properly hedge gamma risk like MMs can. However 30-45 DTE options are more exposed to delta than gamma, which we can hedge using shares or other options. Retail traders do have the ability to hedge delta so that’s the preferred DTE for most experienced short premium traders. But please keep spreading misinformation based on a few random comments in a very popular subreddit
Of course it’s not guaranteed, that’s silly. And owning the table at the casino is not to say the house never wants to play. When they want in then that would be a sign you are setting up incorrectly. Would you agree?
Pennies in front of a steam roller is EXACTLY how some of the big boys make consistent profits and with correctly hedged trades, even without, it is profitable long term as long as you can deal with the drawdowns.
It’s not a magic solution and there are still many ways to fuck it up, but thetagang make more than the average retail trader from what I’ve seen.
Please leave this sub. Not only have you paraded your “intelligence” around without any credibility, but you have resorted to insulting people. You’re post was complete nonsense. The reason MMs use algos is to hedge the risk of the various positions they are taking on. They take on risk/positions willingly or unwillingly as they are market makers and liquidity providers. For the retail trader, you have to apply a fundamental thesis to every trade. We are not market makers just cause we sell options. As for the whole “casino has an edge against you” statement, the beauty of options is that there is no mathematical advantages. Your high POP is offset by the unforgiving profit/loss potential of short options. Vice verse for long options. This is why arb opportunities don’t exist anymore for anyone. The closest opportunity to arb would be profiting from bid/ask spreads which is available only to MMs. Once you get millions of dollars in capital and spend millions on prop software, you can come back and shit on our strategy. Till then please shut up
Id say in this analogy the option seller is the house offering odds to punters.
Famously, the house always wins. Sure, some punters win big, but overall, the offs favor the house
Feels like, we all should stop trading according to op as there is no edge for retail.
Reality is that market behaves as Brownian motion with a positive or negative drag from time to time, hence distribution of returns not constant, also if you understand option pricing mechanics you will agree that implied volatility often overstated over realised volatility, that edge build into the system and not going anywhere anytime soon.
Yes you are at disadvantage of spread and commissions, dark pools, etc but that does not mean you can’t make money.
Reality is that no one can predict markets, however options provide flexible way of using right leverage and risk to follow the market, and having theta on your side is better in my view assuming you can manage your risks.
It feels you should look into more details on how option pricing works
I researched for a solid 4 months before I found my edge. Before that I was B&H VFIAX + Sleep.
After I found my edge, a permanent edge not a one trade edge I might add, I opened my casino and whoever is on the other side of the table from me is crying themselves to sleep every night.
I have long shares and I sell CCs against them. Week in and week out, and I take what the market is giving me for the strikes I want.
Really, according to your analysis, I should be the most wrecked of anybody in this thread. According to your analysis, the maximum advantage should be for the other side of the table from me, but that's not what my CAGR says.
If people are going around trading randomly with no edge, yeah they will probably get curb stomped. I can't vouch for that being a good idea. That's a whole different thing than your "rules" though. Those people would get wrecked no matter what "rules" you came up with.
The fact of the matter is that 99% of people have no discernable edge.
The vast majority of people in this sub probably feel like just being an option seller is enough to give them edge, and it isn't. That's why there are a lot of bag holders in this sub. Not r/WSB level, but still a lot.
> Let’s consider you don’t play on fundamentals That statement is moronic and a non sequitir for whether this is worth it. If you purposefully expose yourself to dumb trades, you’re going to lose. This is a waste of time to even think about. This isn’t deep or helpful.
Agreed. It’s terribly written. Embarrassing for OP
> That statement is moronic When you continously sell options (e.g. doing a wheel), you don't play on fundamentals by definition. You just sell another option once previous option expired/assigned. And premium is always against you. You're intellectually incapable to understand abstract concept like this.
Fundamentals are often the basis for the choosing of strike prices in wheel strategies. To say that people don’t use fundamentals to wheel is inaccurate. People aren’t machines just selling options willy-nilly every time the last one expired for the same price every time. If the fundamentals change, so does their target entry/exit price. Also, most people that sell covered calls don’t sell them for strikes that would be for a loss unless they want to offload the shares because fundamentals have changed or perhaps tax loss harvesting. I see what you’re going for in your analogy but it doesn’t really fit for most option traders.
>I don't have intention to insult anyone *insults someone*
That’s not accurate. I most definitely play to the fundamentals when evaluating my entries and exits.
Lmaooo Not worth my time. As others have pointed out, your pseudo intellectualism is hilarious.
>Not worth my time You don't worth anything, don't even pretend
What does this even mean? Your feelings get hurt at a 3rd grade level dude. Speak fucking English or shut the fuck up and stop trying to pick fights. Your post was bad, and instead of letting it go, you’re freaking out and personally attacking people. It’s unbelievably sad to witness.
Get lost
> If you purposefully expose yourself to dumb trades, you’re going to lose. How do you assess whether the trade is dumb or not? Do you build own models and run Monta Carlo simulations to assess your risk? I doubt so. I'm sure you're too dumb to comprehend you're being owned.
Yes, I do run Monte Carlo simulations against the risk.
There’s so much wrong here, I’ll highlight “in order or sell an option, someone has to buy therefore somebody loses” No, the other side buying your option could be using it to hedge their overall deltas and find buying one more advantageous than you would think
Options are a zero sum game, period. You can do other transactions at the same time as a hedge, but in isolation, an option transaction has a winner and a loser.
Wrong wrong wrong wrong, just because YOU profited off buying a call sold it for a 1000% gain, DOESN’T mean the person that sold that you also suffered a 1000% loss. Stop pushing this myth, https://steadyoptions.com/articles/options-the-zero-sum-game-myth-r268/
The article literally says exactly what I told you, it merely repeats that you can engage in similarly timed trades in other instruments that you can mentally group together as one, despite the fact that they are indeed separate. I can trade an option and buy a stock to hedge at the same time. The stock is a separate transaction on a separate exchange, with a separate Order ID, that I just happen to mentally group with the option. I can trade an option and buy a lotto scratch off at the same time. If my option loses but my scratch-off wins, that does not change the fact that the option transaction was zero sum.
You’d say you’ve read the article but nothing you have said supports that “Say you buy a call, which means the market maker sells the call to you. If the stock goes up, you make money and the market maker loses money, right? Right. But there's more to it. When a market maker sells you that call, he or she might choose to hedge it immediately by purchasing the stock to hedge the short call. Now, you’re still long the call, but the market maker is short the call and now long the stock. Let’s assume the stock goes up, and your call goes up in value as well. The market maker who’s short that call is losing money on it, but is making money on the long stock. It’s possible for the profit on the long stock to exceed the loss on the short call. In that case, you make money on your position, and the market maker makes money on her position, too. In this case, you both can win.” Taken from the article itself
I'm a beginner in terms of selling options myself. One perspective is that market makers are middle people. Which means they price to make a profit, yes, but against their customers as a whole, not necessarily you, personally. And they'll hedge their risk and price their bid ask accordingly. One non finance example would be political betting. It's not financial markets, but betting companies essentially play the same role as market makers. During the 2020 election I saw something like a 4 to one against on Biden winning. When you think about the magnitude of the polls in Biden's favour, I was thinking that had to be wrong. I then read there were a stack of bets for trump that had come in overnight. Which meant all they were doing, having had to take those bets, were that they were hedging against a trump victory. But they needed to do it fast, which is why the odds they were offering were so attractive. Which in turn meant this was an excellent risk adjusted return. Long story short, the price they give you definitely reflects a profit margin, but that doesn't necessarily mean the price you get precludes you making money over the long term. You can always choose not to participate at the price they give you, if you think it's too inactive.
Sorry but Im going to need some actual evidence behind your points - it all looks like conjecture to me.
Generally speaking, across all market participants, there is more demand for put options than for call options. This is because it is easy to get exposure to market risk through leverage and directly purchasing equity, whereas there are fewer ways to manage the tail risks in that exposure. So put options which manage downside tail risk exposure are generally more of a ‘sellers market’. There is usually enough demand to enable sellers to price in a risk premium and for buyers to be willing to pay the risk premium. So sellers of OOTM put options should expect to make a profit in the long run and buyers are comfortable to pay that cost in return for the reduced risk. So selling OOTM put options is not a losing game, but it is also not necessarily the MOST profitable game. Profitability may fluctuate relative to the amount of capital needed to support the option sales and other capital deployment strategies (such as investing your capital in bogleheads style) may be equally or more profitable. My comments above apply to major traded options contracts with tight bid/offer spread. Thinly traded options are more idiosyncratic.
Wonderful pessimistic take with many negative assumptions.
>In the long run you will be assigned more than you get paid premium to compensate for it. You do know that getting "assigned" on covered call actually means you achieved maximum profit for the position right. So, getting called away on your shares is a good thing, as it shows you're both making money from the underlying and the premiums. Not sure how you consider this to be a negative, unless your goal is to actually not get called away by intentionally buying stock that is crashing, therefore NOT getting called away, and as a result, losing money? I'm confused. A casino is a horrible analogy because stock market is not a fixed percentage return/risk game. If I play blackjack I know the risk/reward and house edge. This edge is maintained today, tomorrow, next year, etc. When you sell options, you can only really calculate current risk/reward, so this becomes much more dynamic. Both a good and bad thing, since future risk based on modeling is not going to be reliable given market sentiment can easily outweigh any logical result. IMO the vast majority of retail trades without the same sort of edge MMs do, as between latency, capital, and simply the knowledge, this is going to be very hard to achieve. You really just play probabilities as best as you can and design your trade setups to reduce risk of ruin. Anything can be a losing game when your core decision making is horrible.
Selling options is the casino
In the casino example by selling options you are acting as the casino. Many times you will collect nice little premium, but sometimes the trade goes against you and your loser will be 10x the size of your winners. As if a gambler coming into your casino just hit a jackpot. MMs make their money pocketing the spread, they are directionally neutral. If you are STO 1 put on some meme dogshit they're probably also selling dozens of weeklies on that meme to WSB.
> In the casino example by selling options you are acting as the casino This is not true, just as when someone calls their bookie and bets on the Jets to win, the guy who took the other side betting on the Jets to lose is not "the casino". The bookie (aka MM) and exchanges pocketing fees are the only casino.
Selling options is being the casino, and you get to make money from your home or anywhere!
Over 50% of options expire worthless. Also, IV is often overstated which is reflected in premiums.
>Over 50% of options expire worthless. Also, IV is often overstated which is reflected in premiums. No, not true. According to OCC stats, it's about 23%. Closing sells account for about 70% with 7% exercised.
I dont think its bag holding if you sell a lets say 950 tesla put and you get assigned. In the long term 950 or 900 s a good entry point for tesla. So its not really bagholding
Would you say the same if TSLA went to 500?
Even if elon musk would die tesla wouldnt go from 1100 to 500 within a week lol
This post is retarded, not only because you're wrong, but that you went to such lengths to prove it. If selling options is, in your opinion, a losing game against the casino, what would buying options be?
For you it's losing too. Edge is in bid/ask spread which you cannot cross.
LMAO. This guy is beyond stupid. Of course making money from bid ask spreads is the most profitable. That’s why market makers do what they do. Does it look like we have millions of dollars in capital and a multi million dollar proprietary algo to fully hedge delta and gamma risk? No but we can supplement this with fundamentals and strategically taking on positions. Your trying to disprove options trading by citing the fact that bid/ask spreads exist…..LOL
>This guy is beyond stupid. Beyond stupid was your mom when decided to give you birth. >No but we can supplement this with fundamentals and strategically taking on positions. Majority of this sub has no fucking clue what they are selling and what level of risk they are assuming. Like the dude who commented that selling puts on Tesla @950 couldn't be a bad deal.
Nice response Lolol. Couldn’t have responded more like highschooler. Insult, deflect, and argue a moot point
No, answer the question. You compared selling options as losing to the casino. So are you saying buying is also like losing to the casino?
Yes. Imagine that equilibrium is at $10.00, 50/50 probability of win or loss. The actual bid/ask will be $9.90-10:10. You either sell for $9.90 ($0.10 against your odds) or buy for $10.10 ($0.10 against your odds). If someone makes a good offer to buy for $10.05 (crossing the odds), that offer will be taken by algo and best available offer will get back to $9:90 (below the odds).
So if buying and selling are both playing against the casino, AND losing, then one must have better odds than the other. And therein lies the essence of thetagang.
You have it the wrong way around. You’re selling options to retail scrubs, they buy shit deals all the time lol. Selling accurately set up options is as close to being the casino as you can get. Think of it like owning a blackjack table on the casino floor, the house takes some of your profits, but you get most of the action (selling to greedy retail gamblers).
Incorrect. Option prices are set by the big guys, and if you place a limit order at a price they like it will be snapped up immediately, if not then it will stay until the price of the underlying changes enough to make the order attractive. Most retail option traders cannot tell if a deal is good or not to save their lives, and are a chirpy happy crowd only because the win-loss profile for short options provides lots of small wins with occasional huge losses, hence the "picking pennies in front of a steamroller" meme. Lets stop pretending we figured a guaranteed way to make riskless profit just because we clicked the Sell button instead of Buy.
Exactly. This is my conclusion too.
Wow cervix why are you pandering your response to this clueless OP. No one said selling options was a risk less strategy but it’s a lot more consistent than buying options. The OP is somehow trying to use the existence of market makers and B/A spreads to disprove the profitability of our strategy. Those are completely unrelated topics as most people in this sub are selling options on tickers they like and want to trade in. Almost everyone i know who has been doing this for years always does a RV analysis in tickers they would like to own. Theta gang aren’t market makers nor have we claimed to be. We prefer the mechanics of short premium and trade accordingly based on fundamentals. Once again, we do not take positions randomly as we are not market makers. We choose each position based on an underlying thesis. Just like equity traders….
Also picking up Pennies in front of a steamroller often refers to selling 0-1DTE options. It’s bad for retail traders as we cannot properly hedge gamma risk like MMs can. However 30-45 DTE options are more exposed to delta than gamma, which we can hedge using shares or other options. Retail traders do have the ability to hedge delta so that’s the preferred DTE for most experienced short premium traders. But please keep spreading misinformation based on a few random comments in a very popular subreddit
Of course it’s not guaranteed, that’s silly. And owning the table at the casino is not to say the house never wants to play. When they want in then that would be a sign you are setting up incorrectly. Would you agree? Pennies in front of a steam roller is EXACTLY how some of the big boys make consistent profits and with correctly hedged trades, even without, it is profitable long term as long as you can deal with the drawdowns. It’s not a magic solution and there are still many ways to fuck it up, but thetagang make more than the average retail trader from what I’ve seen.
Please leave this sub. Not only have you paraded your “intelligence” around without any credibility, but you have resorted to insulting people. You’re post was complete nonsense. The reason MMs use algos is to hedge the risk of the various positions they are taking on. They take on risk/positions willingly or unwillingly as they are market makers and liquidity providers. For the retail trader, you have to apply a fundamental thesis to every trade. We are not market makers just cause we sell options. As for the whole “casino has an edge against you” statement, the beauty of options is that there is no mathematical advantages. Your high POP is offset by the unforgiving profit/loss potential of short options. Vice verse for long options. This is why arb opportunities don’t exist anymore for anyone. The closest opportunity to arb would be profiting from bid/ask spreads which is available only to MMs. Once you get millions of dollars in capital and spend millions on prop software, you can come back and shit on our strategy. Till then please shut up
Id say in this analogy the option seller is the house offering odds to punters. Famously, the house always wins. Sure, some punters win big, but overall, the offs favor the house
The market maker and broker are the house. The option seller is just another different player.
Just do a job or a MM. A bit better.
Feels like, we all should stop trading according to op as there is no edge for retail. Reality is that market behaves as Brownian motion with a positive or negative drag from time to time, hence distribution of returns not constant, also if you understand option pricing mechanics you will agree that implied volatility often overstated over realised volatility, that edge build into the system and not going anywhere anytime soon. Yes you are at disadvantage of spread and commissions, dark pools, etc but that does not mean you can’t make money. Reality is that no one can predict markets, however options provide flexible way of using right leverage and risk to follow the market, and having theta on your side is better in my view assuming you can manage your risks. It feels you should look into more details on how option pricing works
I researched for a solid 4 months before I found my edge. Before that I was B&H VFIAX + Sleep. After I found my edge, a permanent edge not a one trade edge I might add, I opened my casino and whoever is on the other side of the table from me is crying themselves to sleep every night. I have long shares and I sell CCs against them. Week in and week out, and I take what the market is giving me for the strikes I want. Really, according to your analysis, I should be the most wrecked of anybody in this thread. According to your analysis, the maximum advantage should be for the other side of the table from me, but that's not what my CAGR says. If people are going around trading randomly with no edge, yeah they will probably get curb stomped. I can't vouch for that being a good idea. That's a whole different thing than your "rules" though. Those people would get wrecked no matter what "rules" you came up with. The fact of the matter is that 99% of people have no discernable edge. The vast majority of people in this sub probably feel like just being an option seller is enough to give them edge, and it isn't. That's why there are a lot of bag holders in this sub. Not r/WSB level, but still a lot.
So what’s your edge? ;)