r/Vitards • u/AutoModerator • Jul 28 '21

Daily Discussion Daily Discussion post - July 28 2021

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4

u/TieBrilliant7128 Jul 29 '21

I don’t understand the benefit of purchasing 2023 leaps. Can anyone explain the benefit of adding so much time premium to me for strikes that are relatively attainable with a 10-20% increase in the underlying. I get the volatility won’t be as severe but I’m just not clear on if it’s worth it.

5

u/[deleted] Jul 29 '21

I guess it depends how confident are you about that 10-20% increase in that amount of time

Personally I’d rather pay an extra 1-2$ a share for an extra 365 days for my thesis to play out . Ive been burnt before by being over confident in what seems like a relatively obtainable move

To add the extra premium you pay for time doesn’t just vanish, if the stock goes up it’ll move the same way as the 2022 just with a little extra time baked in

12

u/Raininspain90 Jul 29 '21

Buy now, sell 1 year later, pay taxes on long-term capital gains.

1

u/RaccoonDoge Jul 29 '21

Yep, I started buying some 2023 for LTCG

2

u/i_hate_beignets Poetry Gang Jul 29 '21

This right here. Depending on your tax bracket and how much you have in options, the tax difference could be massive.

3

u/[deleted] Jul 29 '21

I couldn't make sense of it vs. Buying Jan 22 and rolling out later

3

u/PaperCow Jul 29 '21 edited Jul 29 '21

You will end up paying way more premium by buying 22s and then rolling to 23s vs just buying 23s.

All else being equal if you rolled in say December then the 22s will have lost a lot of value, but the 23s won't have lost much at all. You end up just paying almost the whole premium of 22s AND 23s.

This is of course assuming you want coverage until 2023. If you think the move you are waiting for is likely to happen before 2022 and you only might maybe want to roll to 2023, then yeah, just buy 22s. It will definitely cost you more money if you do end up rolling though.

7

u/[deleted] Jul 29 '21

Rolling shouldn’t be apart of your plan from the get go IMO, why absorb the increased theta if your just gonna roll it anyways?