In case of option trading,buying put option is better then selling call option...?

Question

is it correct or not......because both are done when we expect the stock is over priced... more over in case of selling call option we inquire unlimited lossess na

Answer 1

Risk involves is too much. Share market can also be used as a way to invest and improve .

Answer 2

It depends on your how much risk you want to take on. But most likely buying a put option is a better choice because your reward can be very high with limited risk (the price of the put) while if you sell a call you will gain a fixed amount but you will be exposed to unlimited losses if the stock starts gaining. The one thing that you should also take into account is the time value of the options, if you buy puts, time value is working against you while if you sell calls time value is to your advantage.

Answer 3

It's a matter of risk profile. I will not have a "naked call", the risk is simply too great for me.  The nice thing about a "naked call" is that you get paid for it... rather than buying a "put"...... none the less... "naked options", for me, are way too risky..... unlimited loss is not a good idea!

Answer 4

In the case of options buying only the premium will be the maximum loss and the profit is unlimited. likewise selling options the premium is themaximum  profit and the loss will be unlimited.