replacing Stock with Options - strategy[s]

M

marcoPolo21

i find myself holding more FB [facebook] stock than i should have,
and i'm looking at Option replacement strategies

i like the idea of buying 2018 call leaps,
which will roll out Monday, November 16th

i'm still bullish on FB longer term,
and i'm tempted to just hold on to the stock;
but the market could very easily crash, or have a large correction;
not to mention FB could easily go down, for some unforseen reason

i found a few WWW links to strategies, but i haven't really read them yet

any ideas, links, thoughts?

thanks
marc ;)
 
Looks like a good strategy to buy the leaps if you are strongly bullish on FB.

Here's what buying the 2017 100 calls looked like this past year:

fb.PNG

Note the IV for the above calls is .36 and theta will cost you $0.02 per day.


Here's IV for all strikes of FB :

IV is very near the lows, a good thing for buying options
fb2.PNG


Here's the chain for the 2017 FB leaps:

fb3.PNG
 
IV is low because the stock showed zero stat-vol on the report. It killed all durations. Just because the vol is low doesn't mean that you won't lose to synthetic vol (time). You can be right on direction but still lose on outrights, esp. if we rally further.

Personally, I'd be on long bear calendars.

The Jan17 100/110 bull spread is 2.65. I hate it, but you've got a defined-risk bull position that returns 277% above $110. 5% allocation gets you a 14% return and taxes in 2018.
 
Taxes. Selling the stock will create a taxable gain. If you don't want to add leverage to the position - consider buying puts for protection or a blend of LEAPS and stock.
 
ajacobson said:
Taxes. Selling the stock will create a taxable gain. If you don't want to add leverage to the position - consider buying puts for protection or a blend of LEAPS and stock.
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yes,
i'm seriously considering taking [maybe] half of my position off,
and buying Leaps

somehow, i get along [real well] with the IRS ;)
so paying some [more] taxes doesn't bother me - too much :eek:

thanks,
marc
 
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