Part 2 Trading Master Class

How Option Sellers Earn Profit

Option sellers (writers) make money very differently from buyers.

Sellers earn through:

Premium collection

Time decay (Theta) working in their favor

Market staying within a defined range

Selling gives higher probability of profit but unlimited risk if the market moves aggressively.

Example:

You sell Bank Nifty 49,000 CE at ₹220

Market stays sideways or falls

Premium collapses to ₹30

Your Profit = (220 – 30) × Lot Size

This profit results from the sold option expiring worthless.