Replies to post #108359 on Biotech Values

[mouton29]

<<You could achieve the kind of leverage you’re looking for by using margin to buy more shares than you would be controlling via calls.>>



Hattie seemed to be focused on buying in an IRA ("The way I look at deep in the money calls (in an IRA) is that they provide increased leverage..."). And most brokers won't let you use margin in an IRA and if they did, it would create "unrelated business taxable income" or UBTI and would be taxable to the extent of the leverage. One can structure around that but the costs probably make them impractical for the average retail investor.

[HattieTheWitch]

You could achieve the kind of leverage you’re looking for by using margin to buy more shares than you would be controlling via calls.

Yes, but this is in an IRA, and if it wasn't I would be reluctant to use margin anyway. Once burned, twice shy.

Thanks for your response.