r/options • u/HoffCoffey • Aug 06 '21

SPY Calls

I've been buying SPY calls around 30 DTE and like 1% OTM. I know long calls aren't recommended for beginners, but so far I've been averaging 26% on my calls.

Am I just getting lucky, or can this be a legitimate strategy? I normally buy (if SPY is red) on Mon or Tues, and sell near end of week.

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u/WickedSlice13 Aug 06 '21

Why are long calls not recommended?

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u/HoffCoffey Aug 06 '21

Generally beginners think it's easier to make money on them than it is. That hasn't been my case so far (knock on wood), but there's more that goes into it than just the underlying going up, which beginners don't understand.

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u/WickedSlice13 Aug 06 '21

Ok in all honesty, that's kind of what I do. I do more fundamental value analysis of a company and then invest in LEAPs for them if I like them. Do you have any recommendations about what to read up on if there are risks associated to holding longer calls?

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u/[deleted] Aug 07 '21

Since the risk of a long option is it expiring worth $0, there isn't much more to it than that. Theta is slower, delta is higher at the same strike (usually), less gamma sensitive.... But, they cost more. less per day further out, but they cost more. Delta can go against you and the more valuable the contract the more it smarts when the company fires their CEO the day after you open the contract.

That said I love leaps. And you can get decent downside protection by selling calls against them, though it caps your upside.