Selling Puts

By selling a call option, the seller sells the right to the buyer to purchase the unit of stock from him/her at the set strike price, when the market value of the stock is less than the strike price at or before expiration. The seller sells the option with the assumption that the stock's price will move up or stay the same. In these cases, the seller will profit from the premium he/she has collected. 

The probability of success with options is determined by the movement of the stock. For buying calls, if the stock's price...

• Increases above strike price+ option premium= You profit! 
• Stays the same= You profit! 
• Decreases below strike price= Where the stock price is below the strike price, the buyer will likely decide to exercise his/her right to sell the units of stock to the seller. This causes the seller to incur a loss of the unit of stocks' price, however his/her cost premium is reduced, as he bought the same units of stock for a lower price than market value. 

In summary, a seller of a put option is profitable in 2/3 cases, causing them to have a 1/3 chance of losing.  For selling puts, the max profit is tapped at the premium collected from selling the option.