Using Options to build on or protect longer term positions

[Ironplates]

i have some longer-term bullish positions held either directly or with LEAPS.
what are good ways to use options to benefit if the stock falls in price and to increase exposure at buypoints along the way as the price falls back to areas of support?

 

[Quanto]

If the underlying enters a phase with high ATM IV then you could use a LongButterfly, by selling 2x ATM...
But this works best if the underlying doesn't move much.

 

[Ironplates]

thanks, and tactics if the underlying moves?

 

[Quanto]

thanks, and tactics if the underlying moves?

If it's sure that it will move, but direction is unknown, then you could use a LongStraddle (or the similar one with different strikes called LongStrangle). The strategy generates a profit if the stock price rises or drops considerably. But the lower the IV and the shorter the DTE, the cheaper it will be, since it's a NetDebit construct...

 

[BKR88]

i have some longer-term bullish positions held either directly or with LEAPS.
what are good ways to use options to benefit if the stock falls in price and to increase exposure at buypoints along the way as the price falls back to areas of support?

When stock is at support, sell ATM puts.

Example: TSLA now at 249
Sell Feb 250P for 17.35
If stock closes above 250 at expiration you make 7% in 49 days.
If stock close below 250 you own 100 shares at cost of 232.65.

 

[Ironplates]

great ideas thanks. im thinking ideas to support the underlying in the event price falls.
could buying puts outright or using put verticals act as a protect put? selling the puts and getting assigned could work for building up a position. it seems similar to the "wheel" strategy.

im also bumping across illiquidity issues. ie. the underlying is CACI and i have a long vertical from 320 to 420 with a cost of 25.50 where my entry was at 322.

1. id like to protect the position in the event the price of CACI falls. My stop would be 305 and finding a way to protect the inital entry position would be ideal.

 

[Ironplates]

i also would like to hedge this position in ARK.
i entered below 50 and now would like to protect the gains in the event the price pulls back.
i would also like to buy if the price pulls back to the center line.