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Regardless, picking the correct direction is crucial for the stock buyer and also for the options buyer. You, the ordinary investor, have access to no information that gives you an edge in the marketplace. An analyst who does nothing but study a certain company for years, talks to the CEO, knows the business inside and out, and even works at the company can still pick the wrong direction for the company's stock price. He also has to be concerned with two additional factors: time and expiration.Īctually, picking the right direction is extremely difficult. The buyer of options has to do the same thing, pick the right direction, but that's not all. If the stock goes up and they sell, they make money. Those who buy stocks have to get only one thing right: direction.
He does, however, have a few things working against him. He leverages his money through the purchase of options and can make returns several times his initial cost. The buyer has the advantage of potentially unlimited gains. Which is better, to be a buyer or a seller? There are many factors that affect that decision, so there really is no "better." Both offer advantages and disadvantages. Profiting with Iron Condor Options: Strategies from the Frontline for Trading in Up or Down Markets