Post #2249 by Mark19 on the Mechanical Investing board

Investment Strategies / Mechanical Investing ❤

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Current Price: $30 (down 90% from high).
Buy January 26 calls with a suitable $ amount at several strike prices, say:
$40 strike - 25% of value
$80 strike - 30%
$120 strike - 25%
$160 strike - 15%
$200 strike - 5%

I would not do it that way for a number of reasons.

First, if the strike is above the price, you are buying time value, which is a wasting asset. If you get it well below 30.00, you are getting intrinsic value that does not waste away. Also, there is the delta. If the strike is well below the 30.00, the delta is close to one, so for every dollar the stock goes up, the premium could go up 2.50 or so. I think that is the correct way to use leaps.

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