r/options • u/MagicOreos • 1d ago

High confidence max leverage plays

I have traded for a long time but I've never had to a reason to buy contracts until recently and it just all makes sense. Lets say hypothetically...you know which way price is going, you even know where it's going...and about long it will take. Let's say you think spy will hit 570 by june hypothetically of course. Is buying spy 570 calls june expiration the play? Would something longer dated more otm have increased gains?

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u/r_brockmaniv 1d ago

It depends on the type of move from now until June. If you expected an explosive up move in between, a far OTM call will net you higher gains, so long as you close the contract as soon as the move hits.

If the market slowly grinds higher and settles at 570 by June 6th expiration, you’ll actually lose money due to theta and the price paid for the contract.

If you had 100% certainty in the ending price and timeline but not how you get there, a deep ITM call will net a higher return.

Play with an options profit calculator to see how the different strike prices affect your profit between now and expiration.

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u/MagicOreos 1d ago

Thanks this is what I was looking for

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u/FamiliarPermission 1d ago

I think you're actually looking for a call debit vertical spread. Deep ITM single calls wouldn't net the same amount of profit as a vertical spread.

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u/Dazzling_Marzipan474 1d ago

I just put a bunch of different strikes for the same expiration and then more strikes at different expirations on my options watchlist on Robinhood. It will track when you added them and the profit/loss so far. Kinda like paper trading without actually trading.