Trading is ALL about expecting. You are long of something because you are EXPECTING it to increase in value...When you trade, you like it or not, you make a bet. That is life. Also known as facts.
ITM calls lose WAY more then outright stocks, that is just simple math. If the stock drops 20%, you lose 30% with your 50% margined position, but you could lose 50 or 80% with your DITM calls.
Do the math my friend, this is really basic Option 101 we are talking about
If you use ITM options to match same amount of buying stocks then both positions lose the same $$. In other words if you buy 1 DITM LEAP and compare it to owning 100 shares of stock and the stock drops $3, both positions lose about $300. You can say one lost this percentage and one lost that but it is the same money. In fact a DITM call would retain time value premium so it would not lose $3.00 if the stock dropped $3.00, it could drop by less so that would make your statement wrong to say ITM calls lose way more than outright stocks. a % is not real money, money is real money. So your statement is not correct, you are only using the % but not looking at actual money lost.
Take IBM trading at $154. 100 shares will cost you $7,700 on margin
Jan18 $100 Call @ $55.00 will cost you $5,500 outright (effective price has $1 in time value premium).
If stock drops $3 the stock position loses $300(3.9% loss)
LEAP will lose slightly less than $3.00 due to delta=.9 but let's assume it is $3 and $300 unrealized loss (5.45% loss).
Now you can claim that the LEAP will lose a lot more because it drops 5.45% versus 3.9% for the stock but that is just how you can mislead people. Both lose about $300 which is the same $ value.
Just basic Option 101...
Oh and the remark about greater loss... imagine at expiration IBM is at $100.
Stock loss = 54 points or $5,400
Option loss = $5,500
Loss is separated by time value premium but the amount is NOT SIGNIFICANTLY different to leads to a conclusion that you will lose so much more money.
