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Question:
Should I be concerned with Open Interest when buying an option? For example, Jan2 have very little open interest. Whereas the next regular Jan17 options have tons of interest.
It looks like 2017 options are available now. I am a newbie, can anyone help me with good suggestion. I am looking for a call option to buy as long time investment. Based on current IV and other factors what is the good strike price to buy?
Do you want to buy it as stock replacement? As something more speculative? Planning on rolling it to 18's in a year?
Basically the higher the strike the higher the leverage. For me, my situation, I'd probably look at the $350-450 range, maybe some $550's for high delta.
Do you want to buy it as stock replacement? As something more speculative? Planning on rolling it to 18's in a year?
Basically the higher the strike the higher the leverage. For me, my situation, I'd probably look at the $350-450 range, maybe some $550's for high delta.
The 550s would have a very low delta, no?
Yes individually but per dollar invested buying a bunch of 550s vs a smaller number of ATM calls you will get a higher net delta.
Question: What's the point of rolling options? The only info I find on the net is about rolling short positions. Can you roll long calls? Is the benefit you only pay one trade commission instead of two?
The bid-ask spreads will be much higher at first compared to later and thus you will likely pay a higher price now compared to later (taking other variables like stock price out he comparison). I'm not going to buy any 2017 LEAPS until the bid-ask spreads is reasonable. This will likely happen first on round numbers since they will likely sell more at the beginning (250, 300, etc).
Wouldn't you lose out doing this because of the loss of each transaction? ie. having to sell the lower strike options at a lower cost relative to the bid-ask and buying the higher strike at a relatively higher price? There is also the transaction fees.
Is there any component to the LEAP pricing on first day compared to later?