Trip7

Because if the contract goes against you will get Margin Called.

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Schwanker

Same question I guess. Why not sell puts assuming you have the assets to cover vs the LEAP?

JamesBond

But you believe the stock is undervalued. And, if it goes down, you can roll down. I do that all the time. By buying, you would be out the amount you spent. Selling puts allows you to set a lower price that you would be willing to go long at. There is no right or wrong to any of this, but buying something with an expiration date is too stressful for my taste. You HAVE to see movement up in order to make money. I have breathing room even if there is a down trend for a bit and I already have the money in the bank doing something else for me. If I pick a strike that is 15-20 percent off the current value as you do with calls, I would be getting a huge discount.

And something else I think I have said before, and that is that I really don't look at ROI in terms of percentage. I really don't see the point in annualizing out a short term investment. It seems silly to me because you can't guarantee you will do that for the entire year, and if you only do it once it is nothing but something to puff out your chest over that means nothing. I just look at bottom line dollars made. fwiw, ymmv.


Edit: Oh, and I will give you the tax efficiency thing. Biden is gonna rape short term investors.

Edit 2: AMZN Jan 23 $3400 Puts are $440. I think that is an undervalued stock for that far out. But I won't tie up that much margin for that long.

Electrickjet

Isn't a QRDO is a separation of assets likely caused by a divorce proceeding?

CX500T

That's what mine was used for.

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DenVa

exactly as JB said. You think it’s undervalued and don’t mind owning. Or, you roll down.

I’m sure on your way to becoming an investing guru, you read the quote, “rich people sell insurance, poor people buy it.” I think it was the rich dad, poor dad guy.

reandld

Does anyone feel like a loser when they go about their day?

jaxsurf

No.

Seek help. Either for your mental health issues, or for your trolling tendencies.

TED74

I’m honestly curious what gives someone who doesn’t do finance all day every day confidence in their own ability to determine what is overvalued and what is undervalued? With millions of people and hundreds of funds buying/selling/holding equities, where does the confidence come from to believe one is on the smart side of any given trade? Whatever I’m buying, someone is happily selling. Whatever I’m selling, someone is happy to be buying. With the (illegal) exception of insider actionable knowledge, I feel like millions of people have already heard any good gouge I might stumble on and that info is likely already baked in. Am I selling myself short, so to speak?

OOfff

index fund gang gang. Get rich slowly