option2retire Posted March 18, 2014 Posted March 18, 2014 I read about this strategy in a book and just wanted to make sure I have it right. If I believe that, say, SLV will increase in the long term but decline in the short to intermediate term (say over the next 4-6 months), can I use LEAPS to generate income by buying a 2016 call, for example, and then selling shorter-term calls against it? For example, Jan 2016 21 SLV calls are selling for 2.72, so I'd buy this call and then sell, say, a May 2014 21 call and receive .54, and then repeat if that one expires worthless? What are other strategies that I might consider given my belief that in the short term the price could rise, then by midsummer bottom out, and then rise after that? Quote
Marco Posted March 18, 2014 Posted March 18, 2014 What are other strategies that I might consider given my belief that in the short term the price could rise, then by midsummer bottom out, and then rise after that? quite frankly if you are that good in directional trading that you get the direction and timing right as you discribe it above than you shouldn't trade calendars but put on directional trades with leverage. Otherwise you could leg into a trade - buy the leap first when you think it goes up then sell shorter dated called when you think it reverses and buy them back when it bottomed out.... Just start with the long leg first, if you go short first you ahve unlimited risk and a high margin that will reflect that. Quote
Kim Posted March 18, 2014 Posted March 18, 2014 You need what is the delta of the combined position. If you are really bullish, you might consider go with lower strike for the LEAPS to increase the delta. In your case, it is a regular calendar and you will start losing money if the stock goes beyond $21. Quote
Pirol Posted February 13, 2018 Posted February 13, 2018 Buying FAANGS this days is very expensive, so ? can it be a good idea to buy ATM calls very far out in time (2 years) or be long synthetic very far out in time? Which one of the 2 is best if i am very bullish? Thanks Quote
Kim Posted February 13, 2018 Posted February 13, 2018 Maybe deep ITM to minimize the negative theta? Or modified collar, similar to what we did with SVXY, to provide some downside protection? Quote
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