What if I told you that 90% of the people trading options were too stupid to be doing so? You’d probably feel pretty insulted if you trade options, but let me tell you, I know what I’m talking about and you’re not stupid, either.

Here’s what I’m driving at. With 90% of all options held to expiration expiring worthless, there’s truth to what I’m saying. Let me explain.

New or inexperienced options traders typically prefer to buy cheap, out-of-the-money options because of the promise of low risk and unlimited returns.

What they fail to realize is that those options are cheap for a reason — namely that they haven’t got a snowball’s chance of ever turning a profit. The market would have to move so far beyond its normal boundaries, that it’s virtually impossible to make any money.

‘SELLING OUT’ IS A GOOD THING!

As a professional options trader, I look at option buyers differently. I love those guys because they’re creating something I call the “stupidity premium” and I can make money all day long from it. You can, too.

First, let me tell you how big the profit opportunities really are. In 2008, there are probably going to be around 1 billion or so options traded on the Chicago Board Options Exchange. (Nearly 700 million contracts traded on the CBOE in the first seven months of the year.)

Of those, roughly 90% will be held to expiration and expire worthless.

Trading volume on the CBOE accounts for approximately a third of all trading on the nation’s seven options exchanges, so imagine that number being amplified even further!

But for our example purposes, this means that 900 million options bought are going to go “bad” and be worth a big fat zero when their time’s up.

It also means that the millions of hapless, fortune-hunting traders (who thought they were going to strike it rich) will lose out.

They’re going to lose because they never stopped to think about something that professionals like me think about all the time — namely, that options are a zero-sum game. They’re not like stock in that they don’t just exist in some sort of options storage yard until they’re needed.

900 MILLION REASONS TO SELL OPTIONS

Folks, in order for an option to be created, there has to be both a buyer AND a seller. If there are 290 million options expiring worthless this year, that means there are a lot of buyers and sellers doing business together. And I love that because it means that there are 290 million reasons for you to sell options.

Numerous studies — including several conducted by the options exchanges themselves — show that option sellers not only take home the majority of the bacon, but they also enjoy a statistical advantage every time they enter the markets. That’s something inexperienced options buyers either don’t know or simply choose to ignore.

You can see that in the trading pits in Chicago just like you can in Las Vegas. And what’s wrong with that, you ask? Nothing if you’re into entertainment, but everything if you’re into winning.

COLLECT OTHERS’ MONEY UPFRONT

For instance, 90% of all gamblers think about how much money they’re willing to lose before they quit, yet they play games where they know the odds are stacked heavily against them.

Contrast that with how my professional trader buddies and I play, both in Vegas and in the trading pits. We focus only on those games where we know we can achieve a statistical edge, and we think about how much we want to win per game, per session, per day and per trip.

Of course, we also think about controlling our losses, but my point is that we are using what we know to stack the decks in our favor and we bet accordingly, but only when we have a high probability of winning.

That’s obviously a big difference between the two schools of thought.

When you’re an options buyer — unless you’re one of the very elite few who have a proven, analytical method that can help you pick directional bias, price points and even timing — it’s oftentimes comparable to being the hapless sap who’s sitting at the casino table mooching off the free drinks and comps. If the odds are stacked heavily against you, then you’re not trading to win.

When you’re an option seller, you’re the house. You might lose every now and again but, overall, you enjoy a statistical edge that can lead to long, uninterrupted profit streaks and significant winners over time.

The bottom line? I want you to switch sides beginning with the very next trade you make. Start selling options and truly start moving the odds in your favor.

I’ll bet that once you get a taste of just how easy and consistently profitable it can be, you’ll never go back to buying options again!

Keith Fitz-Gerald is the Investment Director for Money Morning/The Money Map Report. For more information on Keith, read his bio here.