Re:Introducing Multi-Leg Options Strategies
by anoncoward111 on Wednesday June 13, 2018 @01:59PM
(#17305522)
I mean, sure, I agree. I was merely describing a type of multi leg option.
The premium on a 10% move option wouldn't be as high as you think. There's a lot of risk/reward here.
You'll pay a really high premium if your prediction is 'i think it will go up 2% in the next 9 months" :)
Re:Introducing Multi-Leg Options Strategies
by bcheung on Wednesday June 13, 2018 @05:15PM
(#17307010)
That's just one approach. There's no right or wrong answer.
You can also find stocks that you don't think will move at all, or that will only trade within a narrow channel and design calendar trades around it.
I suspect you meant to type "2. Buy in the money options"
If a stock is volatile, as TSLA is, the out of money (OTM) options will take that into consideration and the premium for it will be very very high.
A OTM straddle options trade probably a very bad choice. Like you said, if TSLA don't make a big move, you will lose. Even if they do make a big move, you will still lose because you are opening a trade on both directions.
My personal opinion on options is this: 1. Find stocks that move 2. Buy in the motion options 3. Expiration at least 6 weeks away, prefer to be longer. If price move into your target, great, take profit early.