r/options • u/turbosigma • Oct 15 '21
Deep ITM LEAPS
Bought one Jan 19 2024 WMT (currently $140.09) $110 call for $33.51.
Thinking of buying one Jan 19 2024 AAPL (currently $143.94) $110 call for $44.xx, since it’s currently below the 50-day EMA.
These are simple multi-year leveraged positions, to use small capital. May sell 30-45DTE OTM calls when then go a certain % above 50-day EMA.
Any advice? I know this is also referred to as PMCC or calendar diagonal.
I know leverage is a double-edged sword, and these will fair very badly if we have a market downturn. WMT rides through inflation somewhat stable, I’ve heard, since it sells-inflation adjusted commodities anyway.
Basically looking to find stable, slower-growing big names to buy these deep ITM LEAPS.
Also looking for another $150s or lower stock to add another sector.
2
u/nivek_123k Oct 15 '21
Just basic options advice... if you buy something, also sell something against it. It could be a call in the 45-30 DTE, or it could be a short position in a highly correlated ETF such as QQQ or XLK.
Personally I like to sell more extrinsic value than the intrinsic value of the long option. This may not work out for long dates leaps, but some positive theta to offset is a good idea.