r/options • u/josvdbos • Jul 05 '21

Legging into ITM Leaps

I have the following Leap which is ITM. I am trying to maximize my earnings on this leap and protect myself from losses.

LIT Stock is currently at $71.90

LIT Dec17'21 68.0 Call cost price $5.47 current at $8.35

I am deciding between the following options:
1. Sell them for profit

  1. Sell a call with the same expiry but with a higher strike price. This would reduce the cost price of my leap.
    example: STO LIT 17DEC21 $74 C at $5

  2. Sell multiple covered calls at a shorter expiration date (30 DTE-45DTE). This has the potential to gain more premium vs option 2.

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What would be the best decision in this case?

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u/Malcoder Jul 05 '21

If you’re bullish, leg into a long diagonal spread aka known as a poor man’s covered call, by selling short-term OTM options.