Options Jive - April 8, 2021 - What Is Positive Expectation?

published 6 days ago by tastytrade, Inc.

tastytrade walks through one of the most fundamental concepts in options trading: positive expectation. As premium sellers (or casinos) our main goal is to not go bust...as long as we can do that, the math will take care of profits in the long run.  Historically, selling premium has been profitable over time, but that does not guarantee that short premium will generate a profit in the short term.  To realize the positive expectation of short premium: trade small, trade often, and don’t succumb to the temptation of thinking you know more than the math behind the market.

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