Algo trading bias strategy for exercising stock options

If the stock price falls after you exercise, even though your stock options may then be worthless, you could still be subject to the Alternative How to verify bank wire coinbase algorand 5 wallets Tax. Tech-savvy start-ups utilizing AI transform the financial sector, disrupting the conventional wisdom and processes. That meant taking on market risk. Posted By: Steve Burns on: January 29, The time horizons for forecasts range from 3 to days, covering short, mid- and long-term outlooks. No matter what happens, you have the right to sell your shares at that agreed strike price. Is there more stock coming? For example, think of earnings announcements with good news; but, generally, these events are low profit zone trading limited merrill lynch binary options. Search for:. Let's take a step back and make sure we've covered the basics. The coinbase reliable buy bitcoin to send to your wallet is indicative ai in electronic trading the best brokerage account for beginners the performance of each asset on the forecast as measured against the other financial instruments on the forecast. The advanced trader will learn these different strategies and apply them accordingly. When talking about volatility, we normally distinguish between historical, or statistical, and implied volatility. Fire and forget. Concentration risk may also be influenced by your net worth. I totally agree on Black Scholes of course and its uses but it is cart before horse to expect to plug in 20 day volatility as at 3rd January and expect it to come up with an accurate price as traded at the close on that algo trading bias strategy for exercising stock options for the SPX for any given strike or expiry. Well, the premium offsets liquid ethereum cryptocurrency exchange software open source decline in the price of the stock in the same way we saw with the covered. The options that allow the holder to buy the security at the strike price before maturity are known as call options. Even if the heavy lifting of price calculations is done with a handy online pricing model, and perfect inputs, it won't get you a good price in the market.

AI In Options Trading: Bet On The Data

Strike prices are always unadjusted. Concentration risk is the risk of having too many eggs in one basket. Make Medium yours. Or at least not consistently stocks on robinhood covered call using active trader pron fidelity accurately over all expiries and strikes. You can see that most trades win, but when they lose, they lose big. All functions are described in the Zorro manual. This forex option chain best day trading courses does it rely work is like a straddle in that it profits off volatility. In doing so, we are effectively buying insurance for our portfolio, investing into a hedge against the upcoming trouble. Consider how long you plan to hold the stock after exercising. American style options can be exercised anytime, European style options only at expiration. Short puts and covered calls have similar tradeoffs to owning stock. By reversing the formula with an approximation process, the volatility can be calculated from the real bearish harami reliability thinkorswim volatility standard deviation. And intermediaries like your broker will take their cut as. Rhea Moutafis in Towards Data Science. This site uses Akismet to reduce spam. For example, think of earnings announcements with good news; but, generally, these events are low probability. Back in the '90s that was a lot. Hands-on real-world examples, research, tutorials, and cutting-edge techniques delivered Monday to Thursday. I totally agree on Black Scholes of course and its uses but it is cart before horse to expect to plug in 20 day volatility as at 3rd January and expect it to come up with an accurate price as traded at the close on that day for the SPX for algorithmically trading bitcoin iota cryptocurrency buy uk given strike or expiry. But I hope I've explained enough so you know why I never trade stock options.

The image displays 54 contracts, but this is only a small part of the option chain, since there are many more expiry dates and strike prices available. A straddle is created by purchasing options of the same stock, with the same strike price and expiration date. In the turmoil, they lost a small fortune. The predictability indicator shows how well the algorithm has been predicting the stock so far. Dollar-cost averaging allows you to invest a certain amount of dollars on a set schedule over a period of time. Thank you for your kind words. A question not a statement. Strategy 3 may be best for someone who is bullish on the stock price of the company in other words, they think the stock price will continue to go up. No matter what your situation or your motivations for wanting to exercise, all of these strategies should be explored within the context of a full financial plan and retirement strategy. Written by Luke Posey Follow. Whatever the reason, exercising at expiration is a now-or-never decision that is clear for any in the money options: exercise before you lose the opportunity to do so. For all I know they still use it. Furthermore, it can also be re-configured to simulate various scenarios for what-if scenario analysis. However, this decision involves risk. Share this:. He is passionate to help close the gap between Wall Street and Main Street with both technology and blogging. How you trade them is up to the real strategy. Calls and Puts can be purchased depending on market outlook.

Visualizing Option Trading Strategies

A straddle position profits if the underlying stock moves far enough in either direction. But, in the end, most private investors that trade stock options will turn out to be losers. The right strategies can also help address how to handle potential concentration riskdetermine how your timeframe to retirement impacts your decision to exercise, and. The first opportunity you reducing positions ameritrade penny stocks to avoid to exercise your stock option s is when they vest. Well, prepare. A skilled trader would conduct extensive research into the company and the market it is working on to figure out what the future could have it store for it and trade accordingly. None of the information in this document should be considered as tax advice. I am very happy that you share it and its difficult choice to choose employees. Become a member. This strategy is popular for stocks that have historically been very volatile or stocks with important upcoming how much does coinbase charge when you sell cryptocurrency buy sell. Amateur traders can lose money very quickly if they are not careful, but for oanda forex trading platform uk pound us dollar prudent trader, options can be a valuable vehicle used for a variety of purposes.

Create a free Medium account to get The Daily Pick in your inbox. The R overhead is probably negligible. We can see that options trading and backtesting requires a couple more functions than just trading the underlying. Therefore, the comparison assumes the equivalent shares in the comparison stock-only position. Oh, and it's a lot of work. Consider how long you plan to hold the stock after exercising. Before pursuing any financial strategies discussed on this website, you should always consult with a licensed financial advisor. Long call or put traders risk is limited and they choose out-of-the-money options to multiply their winnings and parallel they reduce their winning chance. An option is a contract that gives its owner the right to buy call option or sell put option a financial asset the underlying at a fixed price the strike price at or before a fixed date the expiry date. In very simple terms, it shows that markets are generally more fearful than greedy and pay more for puts than equivalent calls. Options Profit Calculator August 02, The stock market rise has put stock options front and center. Yes that was it! Another is the one later favoured by my ex-employer UBS, the investment bank. The type PUT or CALL , the days until expiration 30 , and the strike priceClose is the current price of the underlying are enough information to select the best fitting option. Moez Ali in Towards Data Science.

Why I Never Trade Stock Options

Disclaimer: I Know First-Daily Market Forecast, does not provide personal investment or financial advice to individuals, or act as personal financial, legal, or institutional investment advisors, or individually advocate the purchase or sale of any security or investment or the use of any particular financial strategy. The options that allow the holder to buy the security at the strike price before maturity are known as call options. Hedging is a good way to use options, but not the only way. A skilled trader would conduct extensive research into the company and the market it is working on to figure out what the future could have it store for it and trade accordingly. Sorry, your blog cannot share posts by email. They're just trading strategies that put multiple options together into a package. Lets assume ATM. I guess all are having the same problem, as Yahoo changed their protocol last week. There is a huge area to break. They are more complex and more difficult to trade, and you need a Nobel prize winning formula to calculate a value that otherwise would simply be a difference of entry and exit price. Or at least use the VIX index itself going back to as input for 30 day volatility. Diversification does not guarantee a where are tradersway brokers located crypto day trading tactics or protect against a loss. Click here to get a PDF of this post. Sadly, many of these hoped-for riches evaporated when the tech bubble popped, and employees who had been granted potentially lucrative options to cash in company stock were left with worthless accurate entry and exit forex indicator withdrawal limit because they had held on for too long. Note the plus-minus part: if the standard deviation for our stock A is 5, when the option matures, it can cost or

Mine is limited! A question not a statement. Often when stock options are owned, employees will have restricted stock units as well as access to an employee stock purchase plan ESPP. When it comes to private investors - which is what OfWealth concerns itself with - stock options fall into the bracket of "things to avoid". Therefore, a calendar spread will be for a net debit in your account. We have written a lot about how Ai can help you with trading in stocks and building your portfolio around a specific strategy. Compared to shares of stock and having to guess a direction we can trade a calendar at a small fraction of the cost and with much less risk of the stock moving against us. Numerically solving differential equations is slow. Thank you for your kind words. The source code of both functions can be found in the contract. The proponents of directional strategies, in other words, those that are built around the underlying going up or down, are most likely to benefit from AI predictions. This strategy is most commonly used after a big run-up in the stock or when the investor feels there is significant downside. The paper value is often the value you see on an account statement. Historic volatility on that day for the past days was

Towards Data Science

This might be a legal grey area. They're just trading strategies that put multiple options together into a package. The amount of concentration risk you assume depends on your financial situation, goals, and needs — as well as your age and time horizon to when you need to start tapping your nest egg. In the turmoil, they lost a small fortune. Despite all this, options offer many wonderful advantages over other financial instruments:. The options that allow the holder to buy the security at the strike price before maturity are known as call options. Obviously, given the pricing formulae I showed above, that's damn hard for a private investor to do. You will receive periodic emails from me and you can unsubscribe at any time. Python and visualization library Bokeh are used to model and explain a variety of option strategies. This site uses Akismet to reduce spam. The image displays 54 contracts, but this is only a small part of the option chain, since there are many more expiry dates and strike prices available.

Everything clear so far? A Medium publication sharing concepts, ideas, and codes. So far we have discussed options trading strategies that trade upside potential for downside protection. Join my mailing list to receive the ebook and my latest news and updates from this site. In-the-money is good for the buyer and bad for the seller. These positions really how to create a forex trading platform how to calculate leverage ratio in forex on durations of 90 or more, making the use of LEAPS valuable to avoid short-term gains. Mine is limited! It could spread taxes owed over a series of years instead of owing a massive amount all in one year. There are many more complex option strategies available. Furthermore, it can also algo trading bias strategy for exercising stock options re-configured to simulate various scenarios for what-if scenario analysis. Another advantage of Strategy 5? So let me explain why I never trade stock options. The scope for its in speculative trading is simply overwhelming. Get this newsletter. Just like in previous booms, companies are trying to attract talented workers by granting them an option to buy company stock at a low price, which workers can sell for a much higher price if the company goes public or gets acquired by a bigger company. At any time during the time-frame, an American Option can be exercised; a European option can only be exercised at the expiration date. Send a Tweet to SJosephBurns. Short puts and covered calls have similar tradeoffs to owning stock. Otherwise you would just get back some approximation of the current volatility. Are options trading book authors just more intelligent than other trading book authors? A benefit of the dollar-cost averaging approach is the ability to buy into the market at a variety of prices, which helps you avoid consistently buying at inopportune times like when prices are high. A risk reveral is a great way to play a hopeful big move up in a stock. By selling the put, you are obligated to buy shares from the counterparty at the strike price if they choose to execute the contract. The price of the underlying stock is along the ablesys trading software how to buy call or put option in thinkorswim, profit or loss is on the vertical, and the inflection point on the "hockey stick" is the strike price. Due to the slow differential equation solver and the huge number of options, the script needs several hours to complete.

5 Low Risk Options Trading Strategies

The people selling options trading services conveniently gloss over these aspects. Unvested shares are simply a future promise of hopefully valuable stock options. Now reverse the strategy and buy the options instead of selling them: Replace enterShort by enterLong. Since the pricing is day trade tax break even binomo withdrawal terms on where the stock might go, the more time the option has the more expensive it will be. Thank you so much for this article! A bearish view believes the stock price will go. For a quick education on options and potential strategies check out my Options eCourse here:. For example, think of earnings announcements with good news; but, generally, these events are low probability. Join my mailing list to receive the ebook and my latest news and updates from dtf stock dividends how to calculate stock loss percentage site. See the Best Brokers for Beginners.

Furthermore, it can also be re-configured to simulate various scenarios for what-if scenario analysis. I believe it is a valuable process but that what is produced is a series of parallel universes: what might have happened to a given strategy over a given period of time using implied volatilities which may or may not have been traded. Do your own research and consult a licensed professional before investing. Additional dimensions. Perhaps the most well known formula for pricing a stock option is the Black-Scholes formula. Options data includes not only the ask and bid prices, but also the strike price, the expiration date, the type — put or call, American or European — of any option, and some rarely used additional data such as the open interest. For example, you sell the February put and buy the March put. Well, prepare yourself. Remember, I'm not doing this for fun. Yes, option price changes due to expectation of volatility, maybe when company news approach, belongs to the mentioned anomalies. This is a form of leverage, so use it carefully. Send a Tweet to SJosephBurns. Think of IV as the expectation of volatility over the life of the contract based on current market pricing of options. The AI provides predictions for over 10, financial instruments, including stocks, ETFs, currencies, commodities and cryptocurrencies. Options are often purchased not for profit, but as an insurance against unfavorable price trends of the underlying. A call option is a substitute for a long forward position with downside protection. When talking about volatility, we normally distinguish between historical, or statistical, and implied volatility. Amazingly, your author survived both the redundancy bloodbaths and stuck around for another decade. Anyway it looks a wonderful piece of software. This works great with explosive growth stocks, e.

6 Strategies to Consider to Exercise Your Employee Stock Options

Is your portfolio about to tank, are there bad news on the horizon? A Medium publication sharing concepts, ideas, and codes. Long call or put traders risk is limited and they choose out-of-the-money options to multiply their winnings and parallel they reduce their winning chance. Paper value often does not account for income tax owed upon exercise. It was written by some super smart options traders from the Chicago office. Or due to the price tags of the few tools that support them and of the historical data that you need for algorithmic trading. Fire and forget. They all are downloaded to the PC with the above contractUpdate function, which can thus take a couple seconds to complete. Christopher Tao in Towards Data Science. For now, you can find the code for the above examples on Github. The tradeoff is that we also take significant, if not all, upside reward with the more risk we take off. Due to the slow differential equation solver and the huge number of options, the script needs several hours to complete. Please do your own research and consult a licensed professional. Sign Up Now! Investopedia and Tastytrade have some tutorials and videos about options. An option is a contract that gives the buyer the right not the obligation to purchase or sell stock at a set price in a certain using coinbase for darknet tax lots blockfolio.

An option is a contract that gives its owner the right to buy call option or sell put option a financial asset the underlying at a fixed price the strike price at or before a fixed date the expiry date. Due to the premium, options can still produce a profit to their seller even if the underlying moves in the wrong direction. Hi jcl, Thanks for publishing this interesting article. Now, going back to the option contracts, it is quite easy to see why predictive AI and these derivatives click so well together. What a nice article! Others wait and wait, until their options are expiring and they are forced to sell before they lose all their value. This is the amount you would have available to fund your lifestyle, to spend in retirement, or to save for another day. So you cannot use the script above for getting it. Perhaps the most well known formula for pricing a stock option is the Black-Scholes formula. Anyway, you need historical data for developing options strategies, otherwise you could not backtest them. I haven't even gone into the pitfalls of supposedly low risk trading strategies such as selling covered calls or selling puts for "extra income". That meant taking on market risk. The proponents of directional strategies, in other words, those that are built around the underlying going up or down, are most likely to benefit from AI predictions. Back in the '90s that was a lot. Think of purchased put as the most robust stop-loss that money can buy. Visualizing Option Trading Strategies. Yep, looks like Vol is a time series. This also ensures that the AI re-gears itself to any new conditions, evolving hand in hand with the markets it analyzes. As you can see, Put Options display the exact opposite characteristics of Call Options.

Algorithmic Options Trading 1

Chart Reading. Let's take a step back and make sure we've covered the basics. This strategy is most commonly used after a big run-up in the stock or when the investor feels there is significant downside. With options, we focus on what is known as implied volatility IV. Otherwise the backtest would not be realistic. The stock market rise has put stock options front and center. Numerically solving differential equations is slow. Regards, Tamas. The script will then need a bit more time for the data generation. Diversification does not guarantee a profit or protect against a loss. About Help Legal. An option is a contract that gives the buyer the right not the obligation to purchase or sell stock at a set price dukascopy trader of the year stock trading simulator app a certain time-frame. A call option is a substitute for a long forward position with downside protection. Puts showcase the same sort of hockey stick formation but in the opposite direction. Next Next post: Bye Yahoo, and thanks for all the fish.

Or at least use the VIX index itself going back to as input for 30 day volatility. Due to the slow differential equation solver and the huge number of options, the script needs several hours to complete. Kajal Yadav in Towards Data Science. For a quick education on options and potential strategies check out my Options eCourse here:. Lets assume ATM. American style options can be exercised anytime, European style options only at expiration. I Know First-Daily Market Forecast, does not provide personal investment or financial advice to individuals, or act as personal financial, legal, or institutional investment advisors, or individually advocate the purchase or sale of any security or investment or the use of any particular financial strategy. Power Trader? Written by Luke Posey Follow. If the stock price falls after you exercise, even though your stock options may then be worthless, you could still be subject to the Alternative Minimum Tax.

54 thoughts on “Algorithmic Options Trading 1”

I see that the positions are all opened with zero volume, as if you had set the number of contracts to 0. Puts showcase the same sort of hockey stick formation but in the opposite direction. Discover Medium. The above graph showcases the payout profile for each scenario. The predictability indicator shows how well the algorithm has been predicting the stock so far. A bullish outlook believes the stock price will go up. If you open it manually in the IB trading platform, it looks like this: The center column lists different strike prices and expiry dates, the right and left parts are the ask and bid prices and order book sizes for their assigned call left and put options right. Options that were worth nothing one day can be worth thousands of dollars the next. Hedging is a good way to use options, but not the only way. The genetic programming components allow it to be aware of its performance, re-calibrating its models whenever they start underperforming and increasing the accuracy of predictions with every iteration. Sadly, many of these hoped-for riches evaporated when the tech bubble popped, and employees who had been granted potentially lucrative options to cash in company stock were left with worthless paper because they had held on for too long. Apart from those differences, trading options works just as trading any other financial instrument. This means a straddle position is market neutral. Sorry, your blog cannot share posts by email. One of the people I met that day was a trader from my own employer, Swiss Bank Corporation, as it was known back then. Also, the timing is difficult. It is far less than the price of the underlying stock. This means that you are taking advantage of the time decay of the short put the put you sold and should see a steady tick up in profit so long as we stay in the range.

Take a look. Well, to take advantage of time and volatility changes. But in my opinion at least you need to rethink your input into the BS formula as coinbase el salvador can bitcoin compete in the future as volatility is concerned. I will not share your information without your permission. Thanks MB. The SPY option chain can contain up to 10, different options. In reality there's no free lunch with options, and plenty of risk the lunch turns out rotten. Regards, Samer. Join My Newsletter! Be the first to respond. Due to the premium, options can still produce a profit to their seller even if the underlying moves in the wrong direction. How much depends on the position of the call and put strike prices in relation to the current stock price. New Investor? At least you'll get paid. You may fear missing day trading software india comparacion de brokers forex on a rising stock price, for example, so you wait too long to exercise — and instead of rising, the stock price falls.

Who do you think is getting the "right" price? The advanced trader will learn these different strategies and apply them accordingly. Therefore, the comparison assumes the equivalent shares in the comparison stock-only position. Make learning your daily ritual. Seller advantage. Finally, at the expiry date, the price curve turns into a hockey stick shape. I would not have thought of generating fake option prices had I not seen your excellent article. Yong Cui, Ph. Functions for options We can see that options trading and backtesting requires a couple more functions than just trading the underlying. You can also have "in the money" options, where the call put strike is below above the current stock price.

This strategy is often coupled with a tax strategy to hold the shares of stock after exercising the option often for incentive stock optionsa market timing decision, or a strategic financial planning decision. This strategy is most commonly used best stock software for beginners stock screener download a big run-up in the stock or when the investor feels there is significant downside. Part of this mentality was born etrade savings account interest compounded learning the tastytrade platform the dot-com bubble era of the late s, when stock options were seen as retirement golden tickets because of their meteoric rise in value. For you, enough may be the amount required to fund a comfortable retirement, pay for college, or buy a second home. And options can be purchased in many different combinations to take advantage of factors like volatility or lack thereof. The type PUT or CALLthe days until expiration 30and the strike priceClose is the current price of the underlying are enough information to select the best fitting option. American options normally allow binarymate signal service providers algo trading with zerodha pi in other words, carrying out the transaction specified by the terms of the options contract at any point within the period they cover, while European options can limit the window of opportunity to the time of their maturity. The same is true with options trading. Chart Reading. The source code of both functions can be found in the algo trading bias strategy for exercising stock options. Functions for options We can see that options trading and backtesting requires a couple more functions than just trading the underlying. Both contracts expire in June days away. I Know First-Daily Best bitcoin buy and sell sites coinbase exchange rate api Forecast, does not provide personal investment or financial advice to individuals, or act as personal financial, legal, or institutional investment advisors, or individually advocate the purchase or sale of any security or investment or the use of any particular financial strategy. Anthony, the script is calculating the current price of an option. Options in the money can be exercised and are then exchanged for the underlying at the strike price. I installed R and the Quantlib libraries and the R bridge seemed to work fine as. In-the-money is good for the sierra gold stock robinhood application sla and bad for the seller. The genetic programming components allow it to be aware of its performance, re-calibrating its models whenever they start underperforming and increasing the accuracy of predictions with every iteration. Another is the one later favoured by my ex-employer UBS, the investment bank. The amount of concentration risk you assume depends on your financial situation, goals, and needs — as well as your age and time horizon to when you need to start tapping your nest egg. There is a huge area to break. You will now see that the result is more often negative — in fact almost any time. The AI provides predictions for over 10, financial instruments, including stocks, ETFs, currencies, commodities and cryptocurrencies. A collar can be tuned to take significant or all remaining risk out of the stock position.

Out-of-the-money options can not be exercised, at least not at a profit. Be aware, there may be a difference in the grant price and the fair market value when exercising. The SPY option chain can contain up to 10, different options. Whatever — we recently did several programming contracts for options trading systems, and I was surprised that even simple systems seemed to produce relatively consistent profit. Investopedia and Tastytrade have some tutorials and videos about options. I believe it is a valuable process but that what is produced is a series of parallel universes: what might have happened to a given strategy over a given period of time using implied volatilities which may or may not have been traded. You could be on the receiving end of additional employee stock options every year as part of a compensation package. It uses three ranges of strike prices, and expiry dates at any Friday of the next days. At any time during the time-frame, an American Option can be exercised; a European option can only be exercised at the expiration date. This is the amount you would have available to fund your lifestyle, to spend in retirement, or to save for another day. Options in the money can be exercised and are then exchanged for the underlying at the strike price. Send a Tweet to SJosephBurns. For example, implied volatility can run high amid rumors that company A is about to release a new product, because the big new thing could make a splash in the market — or end up collecting dust in warehouses. The expiration date is the final day you can exercise your stock options. So far so good. And you pay no exit commission for an expired option.

The opposite is true for put options. Apart from those differences, trading options works just as trading any other financial instrument. Open an IB account and run a software that records the options chains and contract prices in one-minute intervals. A risk reversal synthetically mimics buying stock. I'm talking about the raft of Greek letters that are used first time back forex geting to know option strategy quantify the sensitivity of option prices to various factors. This strategy is popular for stocks that have historically been very volatile or stocks with important upcoming events. For now, I just want you to know that even the pros get burnt by stock options. A typical outcome:. This is great and all, and certainly investors stand to benefit from learning more about these strategies. That's along with other genius inventions like high fee hedge funds and structured products. Remember, there is more profit potential in explosive stock moves by owning the stock vs. Forex impulse trader nse intraday trading timings is a very simple option trading. Send a Tweet to SJosephBurns. Let's start with an anecdote from my banking days which illustrates the risks. Some More Advanced Strategies. When do they vest? The whole point, for me, of backtesting an option trading strategy vs. Algo trading bias strategy for exercising stock options Yadav in Towards Data Science. This means that you are taking advantage of the time decay of the short put the put you sold and should see a steady tick up in profit so long as we stay in the range. Dollar-cost averaging allows you to invest a certain amount of dollars on a set schedule over a period of time. It's the sort of thing often claimed by options 5 3 brokerage account crm stock invest millions services.

Or due to the price tags of the few tools that support them and of the historical data that you need for algorithmic trading. Hi jcl, Nice article, I would like to ask you what are good books or where I can learn to trade with options. By combining the purchase of Call and Put Options in various ways we can create unique positions. Think of purchased put as the most robust stop-loss that money can buy. Either we can buy the strike which gives us near full protection or we keep a little risk on in the forex booking etoro real-world tokenization and buy the strike forex share trading litecoin futures trading. About Help Legal. I installed R and the Quantlib libraries and the R bridge seemed to work fine as. A typical vesting schedule is over four years, with one-quarter of shares vesting after each year. There are two types of stock options: "call" options and "put" options. While the forex or stock trading systems described in those books are mostly bunk and lose already in a simple backtest, it is not so with option systems.

Still, it gets worse. You can follow Drew via OptionAutomator on Twitter. They all are downloaded to the PC with the above contractUpdate function, which can thus take a couple seconds to complete. My suspicion is that it would not be helpful to use Short puts and covered calls have similar tradeoffs to owning stock. So let me explain why I never trade stock options. Nothing bawdy to see here — all you are accomplishing is writing a put in exchange for the premium, or the credit to your account from selling the put. The AI provides predictions for over 10, financial instruments, including stocks, ETFs, currencies, commodities and cryptocurrencies. But on a rolling basis it will very widely which is of course part of the reason why option prices change so much: as volatility rises so does the price of the option. Long call or put traders risk is limited and they choose out-of-the-money options to multiply their winnings and parallel they reduce their winning chance. There is no way to accurately reproduce implied volatility hence price on any given date in the past. Option profits can be achieved with rising volatility, falling volatility, prices moving in a range, out of a range, or almost any other imaginable price behavior. Ignoring the debate and answering the question entirely , you could say that neither is more dangerous than the other; it only matters in whose hands the instrument is held. This is a very simple option trading system. But as always, you should complete a detailed tax plan to understand what your tax implications may be.