Why we sell options more than we buy them

I started trading options the way most people do. I bought calls on stocks I liked and puts on stocks I did not. After two years I was down 30% and my favorite teacher had a question for me. How many of those trades made money? I had to actually count. The answer was about one in five. He laughed and said something I have repeated to every student since.

Buyers need three things to go right. Sellers need one thing not to go wrong.

The asymmetry that runs the industry

Here is the underlying fact. Implied volatility, the market's forecast of how much a stock will move, is almost always higher than realized volatility, what the stock actually does. Across decades and across markets, IV runs a few percentage points hotter than reality. That gap is called the variance risk premium, and it is as close to a structural edge as exists in markets.

Why does the gap exist? Because most option buyers are buying protection or chasing convexity. They are not price-sensitive. They will pay a little extra for peace of mind or for lottery tickets. Sellers, by being patient and disciplined, capture that small markup every cycle.

This is exactly how insurance works. The insurance company prices every policy a little above the actuarial expected loss. Most years the company makes money. Some years a hurricane hits and they take a hit. Over a long horizon, the markup wins.

What this means for your trades

When IV is high, options are expensive. Selling them collects more premium per dollar of risk. That is why so many of the strategies this app surfaces are credit structures: they make money when nothing happens, and they especially make money when IV starts at a high level and falls.

Look at the scanner. The metric called IV Rank tells you where current IV sits in its 1-year range. When IV Rank is above 50, the scanner leans into selling premium. When IV Rank is below 20, most credit trades become unattractive and the scanner goes quiet. That is by design.

Selling does not mean naked

Selling a call by itself, without a long call somewhere above it as a hedge, has theoretically unlimited risk. That is why I do not teach beginners naked options. Every credit trade in this app pairs short legs with long legs to cap the maximum loss before the trade is placed. Defined risk is the entire point.

What about buying options ever

I still buy options. Three situations:

• Hedging. When I have a portfolio I want to protect, long puts are sometimes the cleanest hedge.
• IV is genuinely cheap. IV Rank below 20 plus a real catalyst within the option's life. Rare but worth waiting for.
• Long-dated leverage. A LEAPS call inside a PMCC is technically a long option, used as stock-replacement.

Outside those three situations, I am usually a seller. So is the scanner.

What to do next

Open the scanner and look for tickers where options look expensive. Those are often where the credit edge lives. Read one idea, compare the credit collected to the max loss, and ask whether the trade pays you enough to wait for the answer.