A trader works in S&P 500 stock index options pit at the Chicago Board Options Exchange (CBOE) in Chicago, Illinois, U.S. (Photographer: Jim Young/Bloomberg)  

Traders Carnival: Decoding The Two Ends Of Options Trading

PR Sundar writes options and Chandan Taparia, a derivatives and technical analyst at Motilal Oswal, buys them. But who’s better off?

Sundar says hedging can save the writer of an option if his strategy goes wrong, but a buyer of options has no such safety. Chandan counters, saying option writers have limited rewards but unlimited risks.

“It’s easy to write index options but it’s very difficult to write options of volatile stocks like PC Jeweller Ltd., real estate stocks or stocks from the Reliance (Anil Ambani) Group,” Chandan says.

Sundar’s response: He made a decent sum by writing options of PC Jeweller.

To find out who came up trumps, which this video: