1. Collecting Option Premiums:

The seller’s primary objective is to collect option premiums by selling options. Once the premium is received, the seller can retain it regardless of whether the option is exercised or not.

2. Hoping for Expiration Without Value:

Sellers typically hope that the option will expire without any intrinsic value (i.e., the underlying asset price does not exceed the strike price for a call option, or does not fall below the strike price for a put option). This allows the seller to keep the entire option premium without having to fulfill the contract obligations.

3. Leveraging Time Decay:

Sellers take advantage of the time value decay (Theta) of options, where the option value decreases as the expiration date approaches. Time decay benefits the seller, as the option value can decrease even if the underlying asset price does not change significantly.

4. Hedging Existing Positions:

Sellers may hold the underlying asset and aim to hedge the risk by selling options. For example, an investor holding stocks can sell call options (covered call) to generate additional income and provide some downside protection.

5. Expecting Low Volatility:

Sellers may anticipate a decrease in market volatility, which would lead to a reduction in option values. In such cases, sellers can profit by selling options.

6. Implementing Complex Strategies:

Sellers may employ various option strategies, such as spread trading, iron condors, or butterfly spreads, to achieve specific risk and return objectives.