GFP: The thing with options is that many factors figure into setting the price. The intrinsic value (if any), the extrinsic value, and the time elements (i.e. time erosion). Volatility makes the price of options rise. The key to making my strategy work will be in trying to catch the very tail end of the market rise. I you wait until the market conforms a downward move you end up paying twice as much for the option. It's a tricky thing to pull off I realize. But with two years to allow the market to correct using LEAPS instead of short term option I believe the strategy is worth pursuing. The beauty of options lies in the leverage with the downside risk limited. You can never lose more than you paid for the option. And with a LEAP you can ride out your bet until there are 6 months left until expiration, then look to sell your option if it hasn't gone your way. You take a loss, but it's a definable risk. Again, no more than you paid for the option. It is only in the last 30 days that the option value really accelerates to the downside. That we finally got a down day of 1% after 108 trading days is a positive event to my perspective. It shows that the downside is possible. Whether the market can re-attain its Trump rally high will be a key indicator. If it can't, then it will be time to start scaling in, a contract at a time.
AI
