Willian,
If you are buying, your statement is correct.
If you are selling, I don't quite agree.
If buying, I am buying a wasting asset, don't like that.
If selling, I am selling a wasting asset, like that very much.
If selling and wrong, i.e. gonna get put or called, can roll it over, hopefully for a credit cause I'm selling more time value, and hope to not get called/go into the money this time. Seems much more forgiving to me, and I like that cause my timing calls are well below 50%.
Leaps are nicer with respect to the wasting asset concept. You have such a long time for the movement to occur...and the majority of the time premium vanishes toward the end, you can roll forward before the real wasting happens. Of course you pay a pretty penny for a long term option, but if the price is really beaten down, and you believe it will rise like a phoenix, may be a great investment.
On the other hand, if a person is retired and values steady income more than growth, selling a leaps call may be appropriate. Selling your right to the stock for todays market price can earn a person about 40%. Beats a bank account.
Tis a very interesting game/investment. Actually I think options get a bad rap cause most people gamble with them. But they have strategic value to an investor too, for producing income, protecting your position, etc.
good luck,
Lee |
