Why Do Traders Often Sell OTM Options Instead of Buying Them?
Traders often sell OTM options to collect the premium, which is composed entirely of time value. This strategy profits from the decay of time value (Theta) and the high probability that the option will expire worthless.
Selling OTM options is a high-probability, low-return strategy, contrasting with buying OTM options, which is a low-probability, high-return strategy.
