Post: #101

(01-27-2018 07:41 AM)booshala Wrote:  

(11-13-2017 10:46 PM)Tail Gunner Wrote:  

(11-13-2017 09:44 PM)Gunn Wrote:  buying any sort of option will give you a negative edge , just like blackjack or roulette the house has a +1%,+3% edge on the players , when u buy an option you have a -2.3% edge

Yes, you typically want to sell options to earn an income from a spread, the second half of the spread acting as insurance and limiting your loss should the price of the underlying stock move against you. But buying LEAPS calls can also provide a good investment opportunity (under the right market conditions), because they are long-term options that provide plenty of time (up to 2.5 years) for your investment strategy to work out.

I was thinking this too: instead of buying the LEAP call, sell a put when the market crashes. People overreact and will pay top dollar to “hedge” their bets when the market is starting to crash. I know there was a famous case where a Japanese trader did this in 2008/2009 and made killings on the premiums.

manage the put at 50% of the credit received and you will have the same unlimited upside of the call