Not necessarily, really. Just curious, do you mean limiting the risk (ie. the possible loss) to max. 5% by using just options, but then w/o a capping at the other side (or a bigger capping there)? Let's know, thx.
Can't believe! Show me... the money Or are you just sarcastic, trying to make a bad joke or a satire, maybe?
You could just buy a long dated, deep ITM call option. Unlimited upside with limited downside. Cost of insurance is the extrinsic value of the call. Downsides: sometimes poor liquidity, no dividends, short term capital gains
Hmm. you sure? How? I tried to test this by buying a deep ITM Long Call DTE=3 yrs, but PL chart doesn't look any good: https://optioncreator.com/sth8uhc Or is something missing in the basket?
Look at fewer DTE. 80-90 delta. Roll when it gets to 90 DTE and you'll keep most of the extrinsic value. What underlying are you trading? I cant see it on your option tool
It's just a generic Black-Scholes tool, it works w/o any market data. Best would be if you post a complete example with your source of data and/or tools etc.