Dude, you have no idea how much I've learnt from you. You made a video about this TSLA trade a while ago and i was blown away and perplexed that such a tactic is not widely spoken about. Then, I came across someone else who recently did this exact same thing and it encouraged me to give it a shot. I legged into a bull call spread on LCID but my max profit is only $2200 (not like the $60k you legged into haha). Either way, this is by far turning out to be my favorite way to trade stocks that have the potential to move higher. Thanks for the detailed post on the TSLA trade, love it.
Chris if the stock is above both strikes are you exiting the spread before expiration or letting them both expire? If exiting, does the order in which you sell the long call and buy back the short call matter?
Hi Chris. I’ve been intrigued by this strategy since you first discussed it on your YouTube videos. I have now created a BCS for net credit twice. I used LEAPS figuring to give the most time for the strategy to work. The first time I had purchased at the money 20 Call in FUBO. My “goal” was to create a BCS spread worth 30. So, when the opportunity first arose I shorted the 55 Call for about 0.60 net credit. FUBO hasn’t performed so well since, but the LEAPS doesn’t expire until 1/2023. The second time was with NET, buying ATM 110 Call and eventually shorting the 160 Call again for net credit under a buck. This time, I was kicking myself because NET kept climbing and I could’ve had a wider spread or taken more of credit for shorting the 160 Call.
One point I don’t think you mentioned is that there is a risk to the strategy in terms of opportunity cost. At the time I’ve shorted the higher strike calls to create the BCS, I could have opted to simply sell the long call (roughly a double in both cases). If both FUBO and NET crash and stay below the long call strike prices, I will have given up that potential return. Call it semantics if you will: the 2 legged-in BCSs I have are risk-free, but they came at a potential opportunity cost. I won’t know if it was worth that cost until 1/2023 when they expire.
Nonetheless, I have a few others that are hopefully in the making. As I am now using the 2024 LEAPS, I think I have more time to just wait before executing the short call. I am very much enjoying your production on YouTube and this site. Really great! Thanks so much for your efforts!
Thanks Chris for your sharing, I am new to the Options world and still learning the concepts from you. I am a bit confused about the bull call spread, I buy a call and short another call at a higher price, in my understanding, when I buy a call, I am hoping the underlying stock price increases, if not, I will lose money whereas I short a call, I am hoping the underlying stock price decreases, then I gain money, but you mentioned: "If TSLA is below $900 when these options expire, the 900 and 1500 calls will be worth zero." I don't understand why the 1500 calls will be worth zero when TSLA is below 900.
Also, you Bought JAN ‘23 900 Call on 9/23/2020 for $10,130 and Shorted JAN ‘23 1500 Call on 1/8/2021 for $23,300, why was it a naked call when you shorted TSLA at a later day?
Thanks Chris for your sharing, I am new to the Options world and still learning the concepts from you. I am a bit confused about the bull call spread, I buy a call and short another call at a higher price, in my understanding, when I buy a call, I am hoping the underlying stock price increases, if not, I will lose money whereas I short a call, I am hoping the underlying stock price decreases, then I gain money, but you mentioned: "If TSLA is below $900 when these options expire, the 900 and 1500 calls will be worth zero." I don't understand why the 1500 calls will be worth zero when TSLA is below 900.
Also, you Bought JAN ‘23 900 Call on 9/23/2020 for $10,130 and Shorted JAN ‘23 1500 Call on 1/8/2021 for $23,300, why was it a naked call when you shorted TSLA at a later day?
Dude, you have no idea how much I've learnt from you. You made a video about this TSLA trade a while ago and i was blown away and perplexed that such a tactic is not widely spoken about. Then, I came across someone else who recently did this exact same thing and it encouraged me to give it a shot. I legged into a bull call spread on LCID but my max profit is only $2200 (not like the $60k you legged into haha). Either way, this is by far turning out to be my favorite way to trade stocks that have the potential to move higher. Thanks for the detailed post on the TSLA trade, love it.
Chris if the stock is above both strikes are you exiting the spread before expiration or letting them both expire? If exiting, does the order in which you sell the long call and buy back the short call matter?
Clever!
Hi Chris. I’ve been intrigued by this strategy since you first discussed it on your YouTube videos. I have now created a BCS for net credit twice. I used LEAPS figuring to give the most time for the strategy to work. The first time I had purchased at the money 20 Call in FUBO. My “goal” was to create a BCS spread worth 30. So, when the opportunity first arose I shorted the 55 Call for about 0.60 net credit. FUBO hasn’t performed so well since, but the LEAPS doesn’t expire until 1/2023. The second time was with NET, buying ATM 110 Call and eventually shorting the 160 Call again for net credit under a buck. This time, I was kicking myself because NET kept climbing and I could’ve had a wider spread or taken more of credit for shorting the 160 Call.
One point I don’t think you mentioned is that there is a risk to the strategy in terms of opportunity cost. At the time I’ve shorted the higher strike calls to create the BCS, I could have opted to simply sell the long call (roughly a double in both cases). If both FUBO and NET crash and stay below the long call strike prices, I will have given up that potential return. Call it semantics if you will: the 2 legged-in BCSs I have are risk-free, but they came at a potential opportunity cost. I won’t know if it was worth that cost until 1/2023 when they expire.
Nonetheless, I have a few others that are hopefully in the making. As I am now using the 2024 LEAPS, I think I have more time to just wait before executing the short call. I am very much enjoying your production on YouTube and this site. Really great! Thanks so much for your efforts!
Thanks Chris for your sharing, I am new to the Options world and still learning the concepts from you. I am a bit confused about the bull call spread, I buy a call and short another call at a higher price, in my understanding, when I buy a call, I am hoping the underlying stock price increases, if not, I will lose money whereas I short a call, I am hoping the underlying stock price decreases, then I gain money, but you mentioned: "If TSLA is below $900 when these options expire, the 900 and 1500 calls will be worth zero." I don't understand why the 1500 calls will be worth zero when TSLA is below 900.
Also, you Bought JAN ‘23 900 Call on 9/23/2020 for $10,130 and Shorted JAN ‘23 1500 Call on 1/8/2021 for $23,300, why was it a naked call when you shorted TSLA at a later day?
Thank you so much.
Thanks Chris for your sharing, I am new to the Options world and still learning the concepts from you. I am a bit confused about the bull call spread, I buy a call and short another call at a higher price, in my understanding, when I buy a call, I am hoping the underlying stock price increases, if not, I will lose money whereas I short a call, I am hoping the underlying stock price decreases, then I gain money, but you mentioned: "If TSLA is below $900 when these options expire, the 900 and 1500 calls will be worth zero." I don't understand why the 1500 calls will be worth zero when TSLA is below 900.
Also, you Bought JAN ‘23 900 Call on 9/23/2020 for $10,130 and Shorted JAN ‘23 1500 Call on 1/8/2021 for $23,300, why was it a naked call when you shorted TSLA at a later day?
Thank you so much.