Daddy’s Home

You Play the Black and the Red Comes Up, that’s the name of an old crime novel by the same guy who wrote Lassie. It’s such a clunky and unpolished title that you can’t help but love it. And, it’s a good analogy to options trading.

Sometimes you make a bet, and you lose.

That was certainly the case with a long-date B2Gold Corp. put option that I sold. Today’s article will use this botched sale as an example of why selling options is a good thing and how you can profit off trades, even when you lose.

Selling Options Vs Buying Them

Options trading is often referred to as a “Rich Man’s Lottery Ticket” or “Picking up pennies in front of a steamroller.”

Additionally, you’ll often hear stories about people going broke trading options. This is even the downfall of the bad guys in both the James Bond film Casino Royale and the Eddie Murphy comedy Trading Places.

However, there is a major difference between buying options and selling options.

When you buy an option, you are paying money in hopes that a stock will either go up in value (calls) or drop in value (puts). If the stock doesn’t go the direction you wanted, your options expire worthless and you lose money.