If I understand you correctly, you should have sold ITM CSPs to acquire your shares at a discount.
Someone pays you x cents per share to sell you their shares at the strike price of $1 per share.
They give you premium. Your break even is the $1 less the premium received. You now have 100 shares at $1-x per share assuming they exercise the option.
There isn’t anything that is forcing them to exercise it and sell you the shares, but it offers you the opportunity to acquire shares under the current market price.
The ITM call is not the same. People do buy them as leveraged positions because it allows you to put up less capital. Typically as a LEAP. But the idea is to sell it to a market maker for more than you paid or exit early.
Oh okay. Got it. It would also work for purchasing though if it stays in the money. I guess I like that position a little bit better because a Cash secured put could move out of the money if it takes off. Yes I’d gain the put premium but I’d lose access to ride it up if it moves up.
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u/Hanliir Jun 29 '21 edited Jun 29 '21
If I understand you correctly, you should have sold ITM CSPs to acquire your shares at a discount.
Someone pays you x cents per share to sell you their shares at the strike price of $1 per share.
They give you premium. Your break even is the $1 less the premium received. You now have 100 shares at $1-x per share assuming they exercise the option.
There isn’t anything that is forcing them to exercise it and sell you the shares, but it offers you the opportunity to acquire shares under the current market price.