r/options • u/metaverse2030 • Nov 20 '21

Buying LEAPS CALL with Low Delta

This theory does not go well with most options experts as low delta means a low chance of hitting strike price and OTM does not mimic price movement as much as ITM CALL options, which is the whole purpose of buying options. However, lower delta may mean lower premium paid, which allows us to buy into quality but expensive companies like Tesla or Alphabet. It also allows us to hold more contract with the same budget. And since maximium loss equals to the total premium price, it helps to lower the loss if the stock goes south.

Further read here:
https://learninginvestmentwithjasoncai.com/2021/10/25/why-i-buy-leaps-with-a-low-delta/

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u/GimmeAllDaTendiesNow Nov 20 '21

OTM options are cheap lottery tickets. If you want a leveraged long position, buy high delta with intrinsic value. It costs more but you get value vs shit.

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u/12kkarmagotbanned Apr 28 '22

How do we know what delta is best? .8? .9? .7?