No one who has ever sold an OTM option has survived. Thats how I know OTM options are not overpriced. @nntaleb
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What is *bounded downside* in selling otm puts ? Unless they are hedged by buying further otm put.
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Let P = current price, S = Strike price for a put. Let U = price of the put. We're talking about an OTM put, so P>S. If you're selling puts, the greatest amount of money you can lose is S-U. Whereas, if you're selling a call option, your downside is infinite.
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How many can you sell? tiny.
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Bounded by a margin call.
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