There are, of course, safe ways and dangerous ways to be short premium and still manage it successfully. Bottom Line: Limited-Risk-Short-Premium is the only way to go. Shorting premium is a way that many derivatives traders consistently make money. On average they win more often than they lose. However, when they lose, it is usually by a much greater amount than their average gain, owing to the high-risk nature of selling naked premium. Selling naked premium should only be for the too wealthy or the too crazy. Too wealthy could be defined by taking a severe beating in the market and it still makes no material difference to the wealth of the individual. The only other reason to sell naked premium is if the person is too crazy. There will be times when there is no chance to manage it, for example the huge gapping market situations. The ideal situation for a premium seller is to go to sleep after initiating the trade and to wake up at expiration with the price of the underlying at the short strike price. It is of course not that easy because the market stretches out the trader’s wallet from time to time, causing him to react for protection. Be careful when selling premium. If at the end of a trading day, the trader has a naked short premium, he or she is in the hands of fate. It is often too late to turn back especially when earnings warnings are announced, unusual surprise events or other great or horrible news.