Would this be a good investment to purchase? Looking at the one year timeline it seems Spy goes up roughly $50/$75 a year. Trying to get it as close to ITM as possible and the single call would cost me roughly $3,600. Am I being stupid?
Now my thought process here is, should I hold it for a big swing? Or play the weekly pumps like when spy went to $530 from low $520’s and gain an estimated $500? If these types of swings happen often I could theoretically collect a few hundred bucks a week playing the same itm calls and scalping the pumps. Is this doable?
Posted by Ok_Pin981
3 Comments
options aren’t investments
It took 2 years for spy to recover from Jan 2022 levels, so it’s not automatic, of course it usually goes up, but just saying there’s always risk. And then remember that you have to add the cost of what you’re paying for the option onto the 525 to actually make money. Yes, spy generally goes up and everybody knows that and how much is the consensus that it will go up is baked into the premium price of the option. So for you to make money, you have to think it’s gonna go up more than the general market consensus of how much it will go up. There is no free money.
How do you think the market will react to a Trump victory? WWIII? China invasion or blockade of Taiwan? Exchange controls? Capital controls? A nuclear detonation? Climate change impact on reinsurance solvency? Solar storm disruptions? A black swan event seems near certain in the near future, but does that mean asset prices will reach or exceed that price? Is it even priced correctly? One thing is clear, don’t look back over the last few decades and expect the next few decades will be the same.