I think we are getting a bit mixed up here over what to read in the English rather than the technical descriptions.
The point I was trying to make was that when buying an option, it is not true that your money goes straight down the toilet 90% of the time, which is the implication that "90% of options expire worthless" might imply.
The option holder has the chance 40-50% of the time of taking a reasonable profit on a held option position ATM when purchased. This means it will not in their case expire worthless with them still holding it.
An option writer however is pretty much stuck with it until expiry.
There's not much point writing options for 2 ticks, and then short-covering it for 1 tick because the commission round turn will destroy that one tick profit. When you write options for sub-10 ticks I suggest that nothing but a cabinet finish will do, ie you can only profit by a worthless expiry.
Whilst that might happen 90% of the time, you only need one expiry above 20 ticks to screw that entire profit from the other occasions, and that's assuming zero commission in this example!
Writing options is a game for experts in risk management who have a hugely diverse portfolio, lots of experience, and most importantly - are close to the market at all times.
Buying options involves no sleep loss, one can "fire and forget", and despite the larger chance of losing money, there is an opportunity to come out ahead overall IF you buy the right options at the right prices.
I note that most people who give "option tips" nearly ALWAYS suggest trades that involve very large commissions, which to me is a conflict of interest if such a tip comes from someone in the brokerage industry!
Stuff that. I'd rather make a $1000 from a straight option purchase, hold, closing sale than $1000 from some fancy spread that because it involves a written leg, I am committed to keep on until expiry!
"Option depreciation works for the writer and against the holder" - yes, but speculation is a dangerous business anyway, and entering a trade with one's eyes open instead of 101 fancy ways to reduce the risk to as near delta zero as possible thus donating commissions to brokers and making precious little oneself is for mugs in my book.
In my early trading days, I lost more money from overtrading (ie spending $1000's in commissions) than I actually lost in the trades themselves. In other words I allowed the "rake" to wear down my bankroll. Nowdays I try to do less trades and expect more profit from the ones I actually do.
Perhaps my commission structures are not as good as you guys get. If I were paying $5 round turn per lot then I guess I'd muck in with spread option trades as a viable strategy, but alas I pay a lot more than that, especially for sub-10 lots.
All in all, I like the flexibility of being able to exit and take an unexpectedly early profit any chance I might get. If I take a position aiming to make a profit of $1000-$2000 and the very next day I can make a closing sale for $5000 then I'm going to take that profit, and not grind my teeth for doing a spread that means I can't take that profit, as I have to buy back the short leg at an extortionate price, and double commission to boot. I'm leant on to run it until expiry, where I will worry that that gain will all be given back in the meantime, assuming of course I didn't sell off that $5k upside in the written leg!
