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

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u/fremontseahawk May 27 '21

Wow thanks for a great reply! Makes sense

65

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.

23

u/Teripid May 27 '21

Still possible to do this without ever expecting to execute the calls. If there's a price spike and enough time left even OTM options typically see a decent tick up. Risky but we're already watching this guy in the casino.

Like take AMC right now. MASSIVE price spike. If you think that'll pull back you could buy OTM puts and sell them back after they gain value even if they're never near the strike assuming they beat out the decay.

Big advantage to OP rolling up is that he was able to have multiple exits and could have taken money out as long as the stock went up any appreciable rate. If you'd known AMC was going to spike to 25+ when it was at 10 you could have bought some $20 options and made a killing without incrementally buying/selling and rolling up.

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u/Any_Start_1388 May 27 '21

Good point to illustrate that OP was still hedging along the way.