Part 7 Trading Master Class

Buyers vs Sellers in Option Trading

Option trading has two sides: buyers and sellers (writers).

Option Buyer

Pays a premium

Risk is limited to the premium paid

Profit potential can be unlimited (for calls)

Needs strong price movement in the expected direction

Option Seller

Receives the premium

Profit is limited to the premium received

Risk can be unlimited (especially in naked positions)

Benefits from time decay and sideways markets

This buyer-seller dynamic makes options a zero-sum game, where one side’s gain is the other’s loss.