why don't most people do this

H

happy trading

why wouldn't everyone buy a deep itm option and keep the rest in cash. for example right now apple is at 134.16 buy a 120 strike that expires in a month that is trading at 14. keep the other 12000 in cash. if apple shoots up u have all the upside and if it crashes tomorrow to 120 u might still have 3 dollars premium as the farther down it goes the the more the delta decreases, and the max loss is 1400.
yes, i know i am not the genius that thought of this first. but this is fairly simple and i don't see a downside to this. can someone tell me the drawbacks?
obviously this strategy is best to do when the bid ask on the option is not to wide.
 
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AAPL210521C00120000 2021-04-16 3:59PM EDT 120.00 14.90 14.95 15.10 -0.40 -2.61% 817 21,548 33.89%

It's a perfectly viable idea, but the devil is in the details. The last offer in the option was $15.10, BUT THESE ARE ALL STALE QUOTES. It also goes x $.205 in May. The deeps generally quote $.10 to .20 wide, but it's reasonably possible to fill midpoint as it trades all 16 venues.
 
happy trading said:
why wouldn't everyone buy a deep itm option and keep the rest in cash. for example right now apple is at 134.16 buy a 120 strike that expires in a month that is trading at 14. keep the other 12000 in cash. if apple shoots up u have all the upside and if it crashes tomorrow to 120 u might still have 3 dollars premium as the farther down it goes the the more the delta decreases, and the max loss is 1400.
yes, i know i am not the genius that thought of this first. but this is fairly simple and i don't see a downside to this. can someone tell me the drawbacks?
obviously this strategy is best to do when the bid ask on the option is not to wide.
More...
If you're so sure it is going up then buy 2 x ATM calls. Risk is even less and 1 to 1 move with the stock.
Risk can be reduced much further. Fire up TOS and be creative.
 
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