The Illusion of Skill in Options Trading: Why Most Traders Are Playing the Wrong Game
The Market Is Smarter Than You Think
If you’ve spent any time in the world of options trading, you’ve probably seen the headlines.
“How I turned $500 into $10,000 overnight!”
“The one trade that could change your life!”
“Make 300% in a week with this simple strategy!”
The financial world has always been a magnet for hyperbole, but options trading takes the cake. The lure of quick profits, the dream of striking it big—it’s the same intoxicating narrative that keeps gamblers glued to the roulette table in Las Vegas. And just like the roulette table, the odds are rarely in your favor if you don’t understand the rules of the game.
Most traders don’t fail because they lack intelligence. They fail because they are playing a low-probability game while believing they have an edge. They mistake luck for skill, momentum for certainty, and outlier success stories for replicable strategies.
But if you’re tired of playing the lottery, there is another way. It’s called high-probability options trading, and it’s rooted in the cold, hard laws of mathematics.
The Two Ways to Trade Options (And Why One is a Coin Flip)
There are two fundamental ways to approach options trading:
- Buying options and hoping for a big move.
- Selling options and letting time decay work in your favor.
Most traders instinctively gravitate toward buying options—it feels natural, exciting, and full of potential. Who wouldn’t want to turn a small sum into a fortune overnight?
But the problem is this: buying options has a built-in probability problem.
📌 If you buy an at-the-money call or put, your probability of success is 50% at best.
📌 If you buy a far out-of-the-money option, your probability of success drops below 30%.
📌 Meanwhile, selling an out-of-the-money option often gives you a probability of success greater than 70%.
Would you rather bet on something that works 30% of the time or 70% of the time?
What the Casinos Already Know (That Most Traders Ignore)
If you’ve ever walked through a casino, you’ll notice something:
- The house doesn’t gamble—it simply sets the odds in its favor.
- It doesn’t need one big win—it makes money consistently over thousands of bets.
- It welcomes new players—because it knows that, in the long run, the math works in its favor.
Options trading is no different.
📌 Buying options is like betting on a long shot at the horse track—low odds, big payout if you win, but almost guaranteed failure over time.
📌 Selling options is like running the casino—winning frequently, taking small gains, and letting probability compound over time.
So why do so many traders ignore this? Because playing the lottery feels more exciting than running a casino.
The Statistics That Matter in Options Trading
Most traders fail because they trade based on hope, not probability.
Here’s what professionals focus on instead:
📊 Probability of Expiring OTM (Out of the Money) – This tells you the likelihood that an option will expire worthless. Smart traders sell options with a 70% or higher probability of expiring worthless.
📊 Delta as a Probability Proxy – A delta of 0.15 means an option has an 85% probability of expiring out of the money. If you’re selling premium, that’s exactly what you want.
📊 IV Rank & IV Percentile – Selling options when implied volatility is high gives you a statistical edge, because you collect more premium and benefit from mean reversion.
📊 Expected Move – The market already prices in the expected move of a stock. Buying options and expecting a move larger than what’s priced in is pure speculation.
If these metrics aren’t part of your trading process, you’re not trading—you’re gambling.
A Smarter Way to Trade: Selling Premium with a Statistical Edge
If you’ve ever been frustrated by buying options and losing money even when you were “right” on direction, it’s time to consider a different approach:
🔹 The Wheel Strategy – Selling cash-secured puts and covered calls to generate income from stocks you already want to own.
🔹 Poor Man’s Covered Calls (PMCC) – A leveraged way to generate income using deep-in-the-money LEAPS as a stock replacement.
🔹 Iron Condors & Credit Spreads – Selling spreads in high IV environments where the probability of profit exceeds 70%.
🔹 Earnings Trades Using IV Crush – Selling premium into earnings when implied volatility is at extreme highs, taking advantage of the inevitable volatility collapse post-earnings.
These aren’t get-rich-quick strategies. They don’t promise 1,000% returns overnight. But they work—because they are backed by probability, not luck.
How to Stop Trading Like the Crowd (And Start Thinking Like a Casino)
1️⃣ Stop chasing outlier trades. A 5% return every month is better than a 500% win followed by account blowups.
2️⃣ Focus on risk-adjusted returns. An 80% win-rate with small, consistent profits is better than a 20% win-rate with big swings.
3️⃣ Use probability-based tools. Look at delta, Probability of Expiring OTM, and IV Rank before every trade.
4️⃣ Manage risk like a professional. Never let a single trade risk more than 2% of your capital.
5️⃣ Ignore the hype. If someone is promising 500% returns with no mention of probability or risk, they are selling a dream—not a strategy.
Final Thoughts: The Market Doesn’t Care About Your Feelings—Only Math
Most traders don’t fail because they lack intelligence. They fail because they trade based on excitement, not probability.
If you’re ready to start trading smarter, with high-probability strategies, and a focus on consistent income over long-term speculation, I invite you to join me at The Option Premium.
📩 Sign up for my free newsletter here → [The Option Premium]
I want to encourage all of you interested in trading options to sign-up for my free weekly newsletter. No, I’m not going to send you more than the one email a week and no, I’m not running a service. I’m a trader. This is completely free from all marketing. You will find educational topics, research, actionable trade ideas, weekly indicators and more each week. I’ve been on Slope for a long, long time and would appreciate all of your support. As always, thanks for your time!
Kindest,
Andy Crowder
