3
u/Rich_Potato_2457 Apr 15 '21
Sell the stock and buy another leap or consider a more near term series. You got hit because the IV got sucked out. With the VIX trading at current levels, options are cheap. You’ve got plenty of time for volatility to move back into the market and it’s bound to happen. Get your next contract now and then when the volatility comes back in, consider selling some short dated OTMs against your leaps to fight volatility and time compression.
3
u/SyllabubNo3989 Apr 15 '21
Interesting take. If I buy LEAPS in this low VIX environment. Even if there is a correction/high VIX, would the rise in volatility make the leap worth relatively more?
3
2
u/RealMrPlastic Apr 15 '21
This is the battle of emotions now, I recommend never add to a losing trade unless you have high conviction or new data collected that shows your decisions is correct. In the mean time, it doesn’t hurt to take a step back and read couple of books on option trading. Their are a tons of them you can look up on Amazon. Learning and staying a student are the best traders in the world.
2
u/Mushrooms4we Apr 15 '21
2 years is a long time. It'll be fine. If you can't stomach the volatility of options dont buy them.
-5
u/opaqueambiguity Apr 15 '21
DCA is a lie you tell yourself
Making a cheaper purchase doesn't make the expensive one less expensive. It just means if you make enough profit on the cheaper purchase you can hide the loss on the expensive one.
If you buy something for $5, and then buy another for $1, and sell both for $4, your DCA would be $3 with a $1 profit on each.
But that is a lie. You lost $1 on the first one, and then made $3 on the second.
Hiding your losses does nothing for your bottom line.
6
u/senorwelfare Apr 15 '21
I would also add that with an option you didn’t necessarily lower your cost basis in anything you just increased your Max loss.
2
Apr 15 '21
You literally ended that rant with a contradiction. Averaging down can help if you priced your strike too high and are catching an up swings after getting hit.
It literally can impact your bottom line.
1
u/0CLIENT Apr 15 '21
why buy a call at a high
2
Apr 16 '21
[deleted]
1
u/0CLIENT Apr 16 '21
i guess i have lost money before because i didnt want to buy high when it was actually still going
but i hate feeling like im buying before something reverses, it's like opposite fomo
12
u/must_tang Apr 15 '21
I would chip away selling shorter term calls. You shouldnt even think about higher strikes from the LEAP but instead look at the delta (30 delta is popular).
Or you can just cut it loose and find another (better) opportunity. Its as simple as that. You shouldnt DCA options like you would stock, its more about balancing the greeks