No. of Recommendations: 9
Instead of buying those calls for ~$130 (150 - 16% gain), you could have simply bought stock for ~$320 (half as many shares) and now had a ~50% gain in a much simpler manner, with fewer decisions to be made.
When I bought the call, BRK was 358, the Jan'26 260 call was 129.47.
When I sold the call, BRK was 383 (up 7.0%) and the call was 150 (up 15.9%). 2.27X leverage.
Of course there was no way to know that BRK would continue going up to near 500. You cannot fault yourself or others for not having a crystal ball.
...fewer decisions...
It's not a lot of decisions. Grab the P/B once a week or month, see if it is below 1.35, if so sell 1/2 the shares and buy DITM LEAP.
Or above 1.55, if so sell the LEAP and buy shares.
Buying high priced (ITM) calls gives you a little leverage, but you then suffer the loss of that time premium week after week after week.
When done right -- meaning at the proper P/B to buy -- the time value isn't all that much.
Eyeballing some of my old data, the TV looks to be around 15% of the call's price.
The delta is close to 1, giving you about 2X leverage.
Now, of course, is not the time to be buying DITM LEAPs.
...gives you a little leverage...
Depends on how you think if it. To an options dabbler, 2X leverage is pathetic.
To a stock dabbler, 2X leverage at a low (pseudo-)interest rate is pretty darn good.
Don't think of this as an options strategy; think of it as a cheap leverage strategy.
An UNCALLABLE fixed-duration margin loan.
