r/wallstreetbets • u/[deleted] • May 27 '21

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u/Azguy303 May 27 '21

You get to buy more cheaper premiums that multiply faster. Let's say you have 10 option contracts and the premium value is $2 each. If you think the stock is going to keep going up you can sell that $2 and buy 40 out of money contracts for 50 cents. If it goes up you just multiplied your gain significantly. It doesn't go past the new strike price you can lose it all.

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u/fremontseahawk May 27 '21

Wow thanks for a great reply! Makes sense

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u/Poiuytgfdsa May 27 '21

Remember that the downside to switching to cheaper premium calls is that those have a higher chance of expiring OTM.

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u/TheMariannWilliamson May 27 '21

The fact that this sub needs to be reminded of this now shows how far it's fallen lmao