Difference between selling call option and buying put option


Theoritically both look same for novice like me? You may not find a buyer to square off your short position atleast not at better prices what you are looking for for illiquid contracts. So you need to wait until you find a suitable time to square off your selling and get the margin money released. Before employing any options strategy it is important to understand ins and out of it.

Theoritically both look same for novice like me? You can consider buying options when there are more number of days to expiry. Which is better--Selling call option or buying put option?

Buy put option in earlier of the month and sell call options difference between selling call option and buying put option you are close to the end of the month. Selling options you will be exposed to unlimited downside risk and fixed upside profit and buying options you will be exposed to unlimited profit and limited risk. More volatility is good for buying option since more time is there during month start, it gives ample chance for volatility effect to take place In selling option, you incur heavy margins being blocked when compared to buying options, the money which you may be interested in entering some other contracts. I am sure this will throw some light on your understanding. So you need to wait until you find a suitable time to square off your selling and get the margin money released.

Buy put option in earlier of the month and sell call options when you are close to the end of the month. Which is better--Selling call option or buying put option? You may not find a buyer to square off your short position atleast not at better prices what you are looking for for illiquid contracts.

Both premiums would not be same. You may not find a buyer to square off your short position atleast not at better prices what you are looking for for illiquid contracts. So you need to wait until you find a suitable time to square off your selling and get the margin money released. You may read this link where I have explained how options work: Which is better--Selling call option or buying put option?

Put premium will be less than call premium. Buy put option in earlier of the month and sell call options when you are close to the end of the month. Which is better--Selling call option or buying put option? If not for the higher margin requirements of writing options most people might have preferred writing to buying option.

More volatility is good for buying option since more time is there during month start, it gives ample chance for volatility effect to take place In selling option, you incur heavy margins being blocked when compared to buying options, the money which you may be interested in entering some difference between selling call option and buying put option contracts. So do not enter selling options which do not have good amount of liquidity. Buy put option in earlier of the month and sell call options when you are close to the end of the month. Selling options you will be exposed to unlimited downside risk and fixed upside profit and buying options you will be exposed to unlimited profit and limited risk. You can consider buying options when there are more number of days to expiry.

So do not enter selling options which do not have good amount of liquidity. You can consider buying options when there are more number of days to expiry. More volatility is good for buying option since more time is there during month start, it gives ample chance for volatility effect to take place In selling option, you incur heavy margins being blocked when compared to buying options, the money which you may be interested in entering some other contracts. I am sure this will throw difference between selling call option and buying put option light on your understanding.