Can you identify the problems with this strategy?Selling Options Into Market Strength

I didn't watch the video. But if they used last-trade prices to test a hypothetical trading strategy, then this would create a bias. If there are stale limit orders, then options will generally trade at the offer as the market rises. So this will show the profit of always trading at the offer. You might say okay, I will place limit orders, and make a profit when the market goes up, and people hit them. But if the last trade is always the highest offer that was lifted - leaving an empty book in its wake - then the theoretical trade price does not show all the limit orders that got hit on the way up.The S&P could even go back down, but there has not been enough time for bids to accumulate. So if the last-trade price is always the high trade of the day, at the offer, on days the market rose, then it is not a realistic indication of where you could actually hope to trade.

How would you fix/correct this bias?

QuoteOriginally posted by: AnalyticalVegaCan you identify the problems with this strategy?It depends on how many calls you want to sell.