To answer this question we must first know the definition of premium. Premium is the capital (money) that you gain or loose from trading options. When you buy premium you are basically buying an option, whether it is a call or a put if you are long on an option it means you are buying premium, when you are short on an option, you are selling premium. In this thread we are going to discuss the difference and risks of buying and selling premium. Go long = Go debt-free, what does this mean? When you are buying premium you have limited risk, therefore you cannot go in debt. The risk of buying premium is equal to the capital invested; this means if you paid 75$ for a long call you are risking 75$ with a chance of unlimited gains. Short = More trouble, when you sell premium you have unlimited risk, when you sell premium if the trade goes wrong then you must provide the option buyer 100 shares of stock (in the case of a call) or buy 100 shares of stocks from him (in case of a put). Now you are probably asking yourself "why would anyone sell premium if you have so much risk?" The answer is that when you sell premium you have more chance of your trade succeeding. When buying premium you must be 100% directionally correct, meaning if the price goes in the other direction you loose, when selling you can profit from no change in the price, if you are directionally correct or if the price slightly fluctuates against you. Another variable to keep in mind is the time decay, the time decay is in favor of the option seller, as the extrinsic value (time value) decays. The option seller wants to buy the option at a lower price, for as the option buyer wants to sell the option at a higher price.