Buying Deep In The Money Calls

Buying deep in the money calls is an alternative to owning the stock. Although it is a less expensive way to own the stock, there are at least two significant risks: (1) time decay will eat away at the value of your deep in the money calls as time passes, and (2) the stock could drop and then not recover before the options expire.

Is buying call options a good idea?

Perhaps, if you are correct on the timing and size of an upward move. But a better strategy than buying deep in the money calls is selling them. You lose out on upside moves but your downside is much better protected, and the time premium portion of the option will almost certainly be converted to income for you by option expiration. It's not a get rich quick strategy, but it is a conservative strategy with lower risk than buying calls.

Born To Sell's Search feature finds deep in the money covered calls that match your personalized investment criteria. It's easy to use, with sliders to set your preferences.

This video demonstrates deep in the money calls (turn your sound on):

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