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<<Options buyers are a lot like casino gamblers -- sure to lose over the long run. - huh?>>

OTM options buyers are purchasing time value, which decays. Buying a decaying asset is a fool's game. A 2004 Ibbotson Associates study of index option prices found that "option writing can be very profitable." According to this study, certain index options (such as the S&P 500) have historically been overpriced.

http://www.ibbotson.com/download/research/CBOE%20040728%20final.pdf

<<So basically you're doing an EV neutral trade, before considering commissions and spreads. Huh?>

I only recommend putting on spread trades with limit orders at fair value, so the spread issue is not relevant. Commissions with a discount broker are negligible and thus are also not relevant. The trade is EV neutral only at the instant you put it on. After a little time passes and time decay occurs, the trade becomes EV positive for the options seller.

Also keep in mind that the trade is EV neutral only when measured against the market's implied volatility figures. These figures are mere estimates and will likely turn out to be different from the actual volatility. So a person with a variant perception on volatility can enter a spread trade right from the start with an EV positive position (from her perspective).

Trading stocks involves the same concept of variant perception. Every stock trade that occurs has a buyer and a seller who think they are getting a good deal. One of them turns out to be wrong.

Hope this helps Brian.

Jim


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