90% of speculative options buyers lose their premiums. The rewards for option writers is small in terms of percentage gains, but most of the option writers are big guys who have extremely good judgement of where the market will go and therefore they write options confidently.
Things to remember:
1) Option buyers need not wait till expiry to make money. They can square off positions at profit anytime. Nobody has done any research on what percentage of people have made money this way.
2) Many premium sellers are option buyers too (spreads). Has any research been done on what percentage sellers are pure naked option sellers?
3) An option might expire worthless. But the buyer could still have made money in a futures position. That is, some professional use options as a hedge. So all option buyers are not idiots.
4) Markets are incredibly efficient. If all option buyers REALLY lose money 90% of the time, and if all option sellers make money 90% of the time, then everybody will start selling options. And there will be no option buyers. Since that is not happening, the often repeated mantra "90% of option buyers lose money" is wrong.
5) Options are products that are designed to lose value over time. Since there are multiple strikes, lots of strikes options end up being worthless. That is a statistical certainty. But has any research been done on options that are profitable, and how profitable they have been? Among the options that have ended up in the money, what is the profit earned divided by premium paid? This ratio will be huge.
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