When you buy an option you pay the premium. Therefore, you have limited downsides to the extent of the premiums paid but unlimited profits if the price of the underlying moves in your favour. This applies in the case of call options and put options. On the other hand, when you sell options, your earnings are limited to the extent of the premium earned but your losses can be potentially unlimited. Prima facie, it looks like the selling of options could be much more risky. But in reality it is not the case because most option sellers do not sell naked options. On the other hand, they use selling options as a means to cover their risk. When your option trade is naked it is a purely speculative trade. On the other hand, a covered option has risk management built into it.