As we all know that writing an option (say call) exposes one to unlimited risk and hence higher margins, I was wondering how is it fundamentally different from buying the complementary option (like put).
Suppose, I am bearish on Nifty today and I expect it to dive upto 7700 before picking up, then the trading strategy calls for shorting. With shares thats the only thing I can do, I can short them. But with options I have two flavors: call and put. So instead of shorting a call option and expect it to go down, why not buy a put option and expect it to go up ? How are the two strategies different fundamentally ?
Personally, for me writing an option is just too risky as movements of 50-100 % aren’t rare in the world of options.