Most traders approach the options market with the right idea but the wrong execution. They know options can generate big returns, but they don’t realize how slim their odds of success really are.
The problem?
They’re betting on large market moves that simply don’t happen often enough. And when those moves don’t materialize, their trades get eaten alive by time decay.
Why Most Traders Lose Money on Options
Most options traders take a directional approach. They buy calls when they think a stock will go up, or puts when they think it will go down. But here’s the issue: The market doesn’t move as much as people think.
Over the last decade, the S&P 500 has stayed within a 1% daily range more than 75% of the time. That means the market is far more likely to stay in a tight range than to make a big move.
That’s a huge problem for anyone buying short-term options. If the market doesn’t move fast enough, time decay kicks in and kills the trade. Even if a trader is right about direction, they can still lose money if the move takes too long to happen.
It’s no wonder why studies show that more than 90% of options traders lose money over time. They’re placing bets that statistically don’t work.
How to Reverse the Odds in Your Favor
Instead of betting on where the market will go, traders can make money by capitalizing on where it won’t go. That’s what market makers do — and they’re the ones consistently taking money from retail traders.
Market makers don’t rely on predicting direction. They structure their trades to profit from the fact that the market usually stays within a certain range. They’re selling options instead of buying them, collecting premium from traders who are making low-probability bets.
This is why strategies that profit from non-movement — rather than big breakouts or breakdowns — have a much better chance of success. By taking a systematic approach that takes advantage of time decay rather than fighting against it, traders can finally stop working against the odds.
Example Trade: Using a Credit Spread to Profit From Time Decay
Instead of buying an option and hoping the market moves in the right direction, traders can sell an option spread that benefits from time decay and a lack of big price movement.
Example Trade: Selling a Bear Call Spread on Apple (AAPL)
Stock: Apple (AAPL)
- Current Price: $180
- Trade Setup:
- Sell a $185 call expiring in 30 days
- Buy a $190 call expiring in 30 days
- Credit Received: $2.00 per share ($200 per contract)
- Max Profit: $200 per contract (if AAPL stays below $185)
- Max Loss: $300 per contract (if AAPL rises above $190)
This trade works by taking advantage of time decay. As long as AAPL stays below $185, both options will lose value over time, and the trader can keep the premium collected upfront. Unlike buying a call and needing a big move up, this strategy profits even if AAPL moves sideways or slightly against the trade.
By systematically selling high-probability setups like this, traders can shift from making low-odds bets to playing the game like a market maker.
The key to making money in options isn’t guessing the next move. It’s playing the numbers game in a way that stacks the probabilities in your favor. If you’re tired of watching options decay to zero while the market drifts sideways, it’s time to start trading like the house — not the gambler.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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