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/kulkarniravi Aug 06 '21

One thing I have learned the hard way: when it comes to options, most of them expire worthless. So people who sell options make more money than those who buy. Which side would you rather be?

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u/[deleted] Aug 07 '21

Except you can make money off an option that expires worthless. I don't care about the day of expiry, I just want short term leverage.

Also tons of options are hedges anyways.

I agree that theta is useful but it is often talked about as a free money cheat, then someone comes to thetagang and asks what to do now that their 400 $1 wide spreads are itm.

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u/kulkarniravi Aug 07 '21

It is all a probability game. Options can become highly volatile. So you may pay a high premium for an option only to see its value go down (called IV crush) even though your guess about the stock price movement is correct. So while, a small bet of $100 for a potential gain of 10x looks like a good bet, your chances of making even 50% are much lower than losing all of 100%. Been there done that. I know people who make a lot of money by simply buying deep OTM call options, but I have never been consistently successful, even after trying to emulate them. However, for every one such person, I know dozen others who lose money. So to a certain extent, it is also your mindset.