Want to get some opinions on my planned strategy for my deep ITM Calls and LEAPS
So, I have some very deep ITM calls - strikes of 199 and 350 with expiration dates of Jan 2022 and June 2022. These were purchased a long time back, prior to the split so they are nicely profitable. My original plan with these was to hold till expiration, then sell some to generate sufficient cash to cover assignment of the rest. Now I learning that having calls this deep ITM is poor use of capital as they don't provide much greater upside than just holding stock. Plus, I have enough long term HODL shares, would rather try out new strategies to learn to generate income.
Currently, I want to have more cash in the account to sell BPS more aggressively over the next few months - this is an IRA account, so needs cash for margin. Second, my plan is to buy some more LEAPS for Jan'24 - I think they are priced well and my expectation is stock price will at least double in that timeframe. In that case, these will appreciate quite well over the next couple of years.
(1) Sell them all - use half the proceeds for LEAPS and half for BPS - probably the cleanest strategy. In that case, I feel it is better to wait till after Q3 earnings for a pop in share price.
(2) Roll them to a higher strike price at same expiration. That will free up cash I want, while I still keep these expiration date options to catch any quick upswing in SP. I was thinking rolling up to 500 strike price, that feels safe enough over the next 9 months.
Would it make any difference which of the two? I tried using the Fidelity P/L calculator to see what is the better option, but couldn't figure out if one strategy is better than the other.
I did well with LEAPS over the last couple of years, but frankly, with the stock going up 15X in that timeframe, not much skill was required. Now have to be more careful selecting which ones to buy. I don't have much confidence in my ability to do well with BPS as I am still learning - so it is better to have some LEAPS to hold passively.
So, I have some very deep ITM calls - strikes of 199 and 350 with expiration dates of Jan 2022 and June 2022. These were purchased a long time back, prior to the split so they are nicely profitable. My original plan with these was to hold till expiration, then sell some to generate sufficient cash to cover assignment of the rest. Now I learning that having calls this deep ITM is poor use of capital as they don't provide much greater upside than just holding stock. Plus, I have enough long term HODL shares, would rather try out new strategies to learn to generate income.
Currently, I want to have more cash in the account to sell BPS more aggressively over the next few months - this is an IRA account, so needs cash for margin. Second, my plan is to buy some more LEAPS for Jan'24 - I think they are priced well and my expectation is stock price will at least double in that timeframe. In that case, these will appreciate quite well over the next couple of years.
(1) Sell them all - use half the proceeds for LEAPS and half for BPS - probably the cleanest strategy. In that case, I feel it is better to wait till after Q3 earnings for a pop in share price.
(2) Roll them to a higher strike price at same expiration. That will free up cash I want, while I still keep these expiration date options to catch any quick upswing in SP. I was thinking rolling up to 500 strike price, that feels safe enough over the next 9 months.
Would it make any difference which of the two? I tried using the Fidelity P/L calculator to see what is the better option, but couldn't figure out if one strategy is better than the other.
I did well with LEAPS over the last couple of years, but frankly, with the stock going up 15X in that timeframe, not much skill was required. Now have to be more careful selecting which ones to buy. I don't have much confidence in my ability to do well with BPS as I am still learning - so it is better to have some LEAPS to hold passively.
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