options friends. help me think about something plz. I am trying to get better about using options to express certain views. Here is what I am thinking about (on the advice of a follow from a while ago)
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I own
$CCJ common. some "easy money" has been made in the stock. I think it could run further. I am considering selling some and buying some long-dated OTM calls. my question: how to think about strike selection?Show this thread
Do you have a view on vol? If not, sell some now, set a stop loss and plan to top up your position again if the stock goes up more. Effectively the same exposure but you won’t be paying the option premium and transactions costs for it. Main downside is gap risk.
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People would rather buy options than implement a sensible trading plan smh.
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I appreciate this take very much. This is one of my questions I was feeling for answers on... how much sense does it make to implement this kind of view with options with no view on vol?
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This makes a lot of sense. In slightly different scenarios, would some potential pros of the call option be: -requires less capital to get the same exposure -you could harvest a tax loss if you were down on the underlying Which potentially could offset the listed disadvantages?
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