When will SPY split?

[zghorner]

I am using options as cheap access to leverage. I typically buy and rotate 2 year ATM calls, once every two weeks. As of close Friday, these are about $40 -$45, which means I need to have about $4000 in disposable income to buy these. Every 2 weeks, another 4 grand. This is not chump change. Are you are a decamillionaire?

no i am not.

and i also trade options because of the leverage without having to use margin.

lets discuss-> wouldn't splitting SPY also split your profits? Sure contracts would be cheaper but can we both agree that long options make money off of underlying price movement? Delta and gamma are due to $1 movement in the underlying...a split would reduce the price movement and you would see less returns than with a current contract.

The way i see this is you will be buying twice as many contracts that make the same amount of money as the current amount. no? could be wrong here but seems this way to me.

 

[Spaghetti Code]

Delta and gamma are due to $1 movement in the underlying...a split would reduce the price movement and you would see less returns than with a current contract.

Correct. but....

The way i see this is you will be buying twice as many contracts that make the same amount of money as the current amount. no? could be wrong here but seems this way to me.

Suppose you have $6000 in disposable cash every pay interval. This means you can only buy 1 contract, leaving $2000 to sit on the sidelines until the next period. The smaller contract size makes it easier to spend a constant amount each interval. It's worth it to me to pay double the commissions and fees, in order to be exposed to the 2 weeks of growth.

I tried steering this thread away from how I *personally* trade this, and instead ask about what forces affect splits, but instead it just comes across as "I'm a pauper". For me it's better to optimize for average return, rather than consistent return. This is probably different than a lot of the people who use this site, who I assume need consistent returns to pay the bills.

 

[murray t turtle]

easiest solution to not being able to buy an entire share of SPY...

%%
OR could buy SPLV;
not exactly as good a% as spy this year, but priced $60+/
Better dividend........................................................

 

[nitrene]

I am using options as cheap access to leverage. I typically buy and rotate 2 year ATM calls, once every two weeks. As of close Friday, these are about $40 -$45, which means I need to have about $4000 in disposable income to buy these. Every 2 weeks, another 4 grand.

Why not use the front month options ITM or ATM. I looked at the leverage of a 2 year ATM call on SPY and today's leverage was just 4:1 on a 1% move the SPY (on the 412 Mar 2023 calls). If you were in the 412 May 2021 calls the leverage was 20:1 and it only cost ~ 9$.

I personally just use the weeklies on SPY, DIA, QQQ , IWM & EEM ATM calls. The leverage is varied from 15-60:1 depending on the ETF & VIX level. SPY seems to have the most leverage & QQQ has the least, usually. Today the SPY weeklies (412 4/23/2021 calls) were up 80% on a 1% on the SPY.