What about a synthetic? It will move dollar for dollar with the stock and the margin is substantially less. BUT if you are in such a trade only for a day or two, you had better pick a high priced, liquid stock like AMZN. Otherwise the bid-ask spreads will kill you.
Lol Chucky is basically referring to a strangle, and within the time frame it does make sense. As long as Amazon continues to be as volatile.
I don't think so, a strangle deep in the money doesn't make sense. Chuckybrown70 must have found the holy grail with all the secrecy and preferring PM's for communication, Range Rover is going to get good private mentoring. Lucky guy
No, chuckybrown is not referring to a strangle. If you look closer chuckybrown wrote "puts or calls" not "puts and calls".
Ah I get it the reason he mentions buying a deep out of the money that has .05 premium. Is because you can sell it later for .10-20 for a decent profit if ti does move in that direction. If you lose you're maximum downside is 100% maximum upside is anywhere from 300-10,000% it's no big secret. I figured that one out a long time ago.
If it has a delta of 1.0 and makes 1:1 to the upside then it's going to lose 1:1 to the downside, especially for the criteria of AMZN moving 1-2 pts up or down in the next few days as posed by the OP. The highest strike AMZN call with a delta of 1.0 will lose maybe $9.75 for the first 10 pts of drop. So technically, you're right. It will lose "less" than 1:1 but not much less than that ratio And FWIW, the lower the IV, the more an underlying can drop before the loss ratio gets away from 1:1
As MTE pointed out, Chucky was not referring to a strangle. If he were, it would be a horrible (losing) choice in the OP's context of a short term 1-2 pt move up or down.