Deep In The Money Call Options – Why They're Better Than Stocks



Are you bullish on a stock?

If so, then you might want to buy deep-in-the-money call options instead of buying the shares.

Why?

– Less cost
– Less risk
– Better returns

It’s an amazing strategy, and the only option-buying strategy I recommend.

In this video, I will explain all the reasons why buying deep-in-the-money call options is superior to buying stock.

Also in the video, I analyze various stock charts as part of my “Saturday Synopsis”, to comment on last week’s trading activity and what may lay ahead for next week.

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DISCLAIMER: This video is for educational purposes only and should not be construed as financial advice or a recommendation to buy or sell any security or investment. Consult with a professional financial advisor before making any investment decisions.

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23 thoughts on “Deep In The Money Call Options – Why They're Better Than Stocks”

  1. Thanks for the video, but I disagree on the delta, if you want to make money and option price move alot, u better of with the lower delta u mentioned here 27:31 . At strike price of 60 the delta was .91 and option price lets say 26. 0.91/ 26 = 3.5 % return for every 1 dollar move on the stock. Now if u take 85 Strike. The option cost 9 and delta is 0.54. 0.54/9= 6% so for ever 1 dollar move, ur option will move by 6% compared to 3.5% with higher delta

  2. Hi Lee, today I checked the price, AMD is $65.41, but the option using your principle is priced $32, almost 50% of the stock price. In your example, it costs only 30% of the stock price. What is the reason behind it?

  3. Can buying deep in the money call options work on a weekly or bi-weekly basis when mixed with technical analysis ?? I buy stock on certain support levels. I would like to buy calls and puts at these levels too

  4. Hi Lee, I noticed that DITM call options have got much more expensive, because of higher interest rate right? Is it still worthwhile to do it? If the market expectation for increasing interest gets lower, the value of DITM call options should get lower too.

  5. ** THIS VIDEO IS MISTAKEN. OPTIONS MAKE YOU LESS $$$. **

    Lee, the ROI on options is not better than on stocks, it is LESS.

    Yes, you are right that options are a better strategy, but you are not comparing apples to apples and so you came out with incorrect P/L and ROI figures.

    You need to figure the return on equal amounts of capital invested into stocks and options, as follows.

    Case 1: market price goes below break even for options contract (86.00 per share)

    the capital spent on the options contract is 2600, and since its worthless you get sales of 0, for a loss of 2600.

    if you had spent 2600 on stock, then you would have 30.71 shares, and so you'd have the following losses:

    PRICE PL
    0.00 -2,600
    25.00 -1,832
    50.00 -1,064
    84.65 0

    Case 2: market price goes above break even for options contract

    the capital spent on the options contract is 8600 because you exercised the option at a cost basis of 86.00.
    if you had spent 8600 on stock, then you would have 101.59 shares, and so you'd have the following:

    PRICE STOCK PL DITM PL
    86.00 137.15 0.00
    100.00 1559.48 1400.00
    150.00 6639.22 6400.00
    200.00 11718.96 11400.00

    As you can see, the option ROI is always worse and that's because you are paying a premium in order to obtain the contract. You can't get something for nothing. What you gain through lower your risk you also give up by taking lower profits.

  6. Hi Lee very good video, never thought of using ITM options this way ? I have couple of questions …. 1. If Deep ITM with delta 0.9 became very deep ITM means stock spot has appreciated a lot and if try to square off the DITM whether we will be able to sell that Call or we will face liquidity issues ? what is the alternate to this ? 2. Another question is if we sell the PUT for stock delivery and if PUT becomes ITM then can we buy DITM CE instead of taking deliver of stock …just thought came in mind pls.do reply.

  7. Thanks so much for this incredible video. Everything was explained so well. I will be following what ever you do from now on. I’ve already looked at your site. I’m so happy I found you.

  8. Yes but the odds of AMD stock price dropping to zero although not impossible is extremely unlikely but the odds of your call options becoming worth zero in an unforeseen market downturn is greater if you purchase actual shares of stock then if the market downturns especially for a lengthy period you still hold real shares and when the market goes back up you are back in the money equaling lower risk.

  9. Someone used GME to explain it to me and it blew my mind. Say you bought $1,000,000 of stock in early January 2021 when GME was at $15 per stock. You get almost 67,000 shares and get about $26 million pre-taxes if you cashed out at $400. Not bad.

    If you bought 30,000 options with $1,000,000 in early January with a $40 strike price, you’d have access to 3,000,000 shares worth over a BILLION when the stock hit $400.

    Same amount of starting money, but the difference in ROI is astronomical.

  10. Love your videos! Why buy DITM call options over selling DITM put options where I get paid for premium vs me spending money on the premium?

  11. Lee, thanks, started using this a little about 5 weeks ago to go along with basic wheel strategy. Very happy with results thus far, I have just been scalping for small profits on many of the positions after just a couple of days. Would like to keep some till close to expiration, but I have trouble not wanting to secure that profit. Anyway…thanks for the information and knowledge you share.

  12. Hi Lee, how would you go about rolling a DITM call option? Would you find another call option with a delta of 90 for around the same price you purchased the original option for? Thanks for your help. Might be something you do a video on as well. Thanks!

  13. Hey Lee Lowell, what´s up, greetings from Brazil…

    I will start to operate on the US market soon, using your strategy of course, but I need some help.

    Stocks/Companies that are good, but not soooo expensive (maximum USD 50 per share);
    Just being very conservative at first, so if I get exercised I won't have any issue.

    Thanks and by the way, I was options buyer and my goal is to become options seller!

  14. What's the pros and cons of buying ATM vs DITM calls? And I don't understand why choosing delta of 90. I would appreciate if you make a video to compare them. Thanks!

  15. Lee, Is there a remedy if the stock price falls below the breakeven a few days before expiration? Some way to avoid losses and get out early? Is the stock price considered OTM whenever it falls below the strike price? What price is being referred to by the label Deep ITM? The stock, the call option or the strike price? Thnx in advance!

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