A.I.M. Users Bulletin Board

[Toofuzzy]

Hi Allen

Re deep in money options to Aim

First there are two ways.
1) the way I have been doing it is to pretend I own the shares.
Stock at $30, I buy a $15 call( trying for low time premium on Leap)lets say cost is $16. So I will say cost is $16 premium + $15 strike price = $31 and I will use that to Aim

2) you can just Aim the cost of the option so if $16 cost then PC is $16. I would Aim a minimum of 10 contracts and then figure out what price change you need to trade 2 contracts. Set Safe to 20%

So you want to start this when the security is low. If doing # 2) then use Dow stocks or other stable large caps with small option spreads.

With method 1) you might want to check out ERX but really anything with low or no dividend that you would like to own because it is near a 52 week low that has a tight bid/ask spread.Use the options to buy at half the cost, not to control twice as many shares.

I will BUY calls on leveraged funds but I find it is not worth selling covered calls EXCEP way out of the money to cover the time premium on the deep in the money calls I bought. Example: I buy $15 call for $16 on a $30 stock. I MAY sell a $40 or $50 call same expiration date ( or one year if I bought a 2 year LEAP). If it gets called I am still making stupid money.

Toofuzzy