/biz/ - Business & Finance

>>16474675
This may seem like a weird question but I try to keep my trading very simple so my mental framework for options boils down to the effective leverage I'm getting. I multiply the delta by the price of the underlying and that by 100 to get the dollar amount of the underlying I'm actually getting the use of then I divide that by what I'm paying. So if I'm buying SPY calls for $5 and the delta is 0.5 and SPY is trading for $300 and I'm getting 100 options then 300*0.5*100=$15,000. Then I take the 15000 and divide that by 500 which tells me out the gate I'm buying SPY with 30x leverage. So I'm buying SPY at 30x with no chance of a margin call. The only downside being there is a hard deadline to get out of the trade and the numbers decay due to time value and volatility (and interest rates to a lesser extent). I never hold to maturity and try to get out of the trade before theta has a large impact. My trades usually work. My question is do you think this is a useful model or have I just been getting lucky

>>16468975
This shit'll make you rich
>nb4 okboomer

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