Why? Buying deep in-the-money (ITM) options is a good way of carrying out directional trading in high volatility market environments. But recognize that these are the big cap winners in the bizarre year that is 2020. An example of this would be now you buy the C JAN 5 Calls … Buying options is a lot like gambling at the casino. Hit him up! Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram. They are addicted to the thrill of the game as they continue to look for that next explosive trade. Now one might inquire about the huge unexercised return of 13.64%. "I expect these 10 up stock winners to keep winning as we approach the end of the bizarre year that was 2020," he said. The show is carried live at 5 p.m. Eastern Time weekdays. The call-in number is 1-800-743-CNBC. You’re betting for a specific outcome … In a Deep In The Money Covered Call, deep in the money call options are written, which means that these call options literally offsets any price movement of the underlying stock, immunizing the options trading position from any directional risk. The strategy involves picking good companies where the stock price is too cheap and buying deep in the money calls for several months out. Hit him up! Because 90% of traders who buy options without having an edge lose money. Buy deep-in-the-money calls, if you like. For example, you have an option with a strike price of 20 on a stock which currently trades at 50. * ABC Jan 50 calls trading at $15 (These are in the money by two strike prices.) Let's say you like McMoRan Exploration (MMR, oil & gas company). It makes more sense—instead of buying 500 shares of ABC stock at $60 (for $30,000)—to buy five of the ABC Jan 45 calls at $18.50 (for $9,250). * ABC Jan 45 calls trading at $18.50 (These are in the money by three strike prices.) Finally, in a heroically stupid bet, I decided that instead of wagering $200 to $300 at a time and losing it all, I would take all of the money I had left and make one colossal bet (at least for me) and I bought 10 Motorola deep-in-the-money calls for about $8. He also suggested that traders who are willing to take on higher risk can place “deep-in-the-money call options.” “I expect these 10 up stock winners to keep winning as we approach the end of the bizarre year that was 2020,” he said. Deep in-the-money calls are those where the strike price of the call option is significantly less than the current stock price. Why? Definition of "In the Money Call": A call option is said to be in the money when the current market price of the stock is above the strike price of the call. Selling deep in-the-money (ITM) calls when they are pumped with time premium. Cramer's company email address is madmoney@cnbc.com. It’s a fool’s errand. When you have the right to buy anything below the current market price, then that right has value. You could buy 1000 shares of stock at 16.91 ($16910) and then write ten Mar 15 calls for 2.45 ($245). Want to take a deep dive into Cramer's world? The six-month (December) deep-in-the-money 1050 call is now trading for $131, meaning you can initiate the long side of the trade for $13,100 instead of $115,500. So, deep ITM is safer and you protect yourself from losing all of your premium as long as there isn't a … Want to take a deep dive into Cramer's world? The deep in the money call option strategy was the first option strategy that I used, when I got into options trading several years ago. Dykstra buys 10 calls and looks for the stock to … What a savings! Deep in the money call option. And then the game is over. Cramer takes live calls as host of CNBC's "Mad Money" and email questions and comments through the station. The intrinsic value of this option is 30 dollars per share and you can theoretically lose … Buying options is a lot like gambling at the casino. So, "deep in the money" call options would be calls where the strike price is at least $10 less than the price of the underlying stock. However, buying deep ITM options cost less than stock, allowing you to either leverage up or retain cash for other investments or to just earn interest. Because 90% of traders who buy options without having an edge lose money. The call prices will tend to go up dollar for dollar with the stock price since they are already "in the money". On the other hand, Lee may think that the stock has further upside. We then simultaneously buy the stock and sell these lucrative ITM calls. Don’t buy all at once, leave some room. Let’s start with the less abstruse. (As the Options on NSE are cash settled and not exercised through actual delivery, answers about exercising are not relevant to the situation explained by the OP. ) You’re betting for a specific outcome with odds of winning a mere 25% to 40%! Questions, comments, suggestions for … That is the case John made to me when I received his email in January 2018. Cramer recommended 10 stocks that he would be a buyer of on any pullback through the end of 2020. Call Option becoming Deep In The Money: It is a happy situation to be in. Stock is trading at 16.91 with $1 increment strikes so any option with a strike of 15 or less would be deep in the money. The deep in-the-money $50.00 strike creates an opportunity to purchase KORS at a minuscule discount of 0.34% whereas the out-of-the-money puts generate much more significant discounts of 6.80% and 10.99%. For the next four years, Dykstra made stock picks, focusing on "deep-in-the-money calls"—a way to buy leveraged options—for tens of thousands of followers on Cramer's website. To double your money (100% gain) with the 20 call you would need the stock to reach 34.46 at expiration. My only concern is there are usually extremely wide bid/ask spreads on deep in-the-money calls. He suggested buying an "in the money call" on a stock and riding it up and then in a different account selling the underlying stock short, after you have lock in profits as opposed to selling the stock. What is “significantly less”? Holding deep ITM calls (or puts) is like buying (or shorting) the underlying stock in a sense, as deep ITM options move point-for-point with their underlying. 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