Options as Stock alternative

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I am playing with an idea… follow a Stock Developer strategy,but instead of going Long or Short the common stock, I buy Calls / Puts way out like August of this year.

Is this a good idea or not? I do not have a large enough account to make any headway on straight common stock.

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with vix at 20, its gonna be expensive. you can definitely buy calls and puts. but you might pay a lot in premiums. prob easier or better buy indices options. long calls / puts is kinda a lotto ticket. If you buy apple august $200 call. it will cost you $4. so you need apple to jump 17% between now and August for you to make any money.

or you can swing trade calls/puts using monthly options and use options as a leverage. in $aapl $185 call for $1, and get out when it hits $1.20-$1.50 range. or stoploss at $0.50 and add $1 and roll to april $185 if apple keep going lower. but timing is important.

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@JohnDesey, you don’t need to buy long expiry date options since you will be pay for the premium (which by the way you can see in the delta value). The closer to 1 the delta is the less premium the option has to decay with.

The idea is the buy a call or put that is deep in the money (but be careful of the spread) with a short expiry and then rollover the contract after it expires. You will incur commissions and spread costs but its better than paying for too much premium with a longer expiry. The comissions are negligable with a broker such as interactive brokers.

What you are planning on doing is called a synthetic long/short of the underlying stock.

Hope this helps!

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btw…Its best to use this synthetic long method on high volume stocks where the spreads are more narrow and to use weekly options or biweekly options where possible.

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@JohnDesey, I need to correct what was said previously…you will need to rollover PRIOR to expiration and not AFTER…my miswording…lol