ChatGPT + options strategy · The River of Wealth

ChatGPT + options strategy

I'm LOVING ChatGPT as a tool to quickly analyze potential strategies or trades. Still definitely need to dummy-check it! But it's very useful to talk through ideas.

Today's discussion centered around Micron - I love the long term upside potential there, but not ready to run out and buy 100 shares of it at ~$250 a pop. So I went exploring possibilities that could expose me to the unlimited upside while limiting my downside. Interested in your take

@Jeffrey Cowan

Basic thesis:

Micron goes substantially up in value over the next 3-5 years, based on the fundamentals as I understand them. I want to own it without owning it.

Theory: buy a LEAP call to provide that long term upside exposure, while only risking the premium. In the meantime, sell cash secured puts or possibly "poor man's covered calls" to generate income (I'm biased much more towards CSPs given this is a stock I prob want to own long term anyway).

ChatGPT's advice: buy a deep ITM call for a far out date (January '28 is the furthest one currently available), optimizing for high delta, lower capital investment, better breakeven, and better leverage. Its opinion is the 100 strike fits my needs best - currently trading at $147, the breakeven is about $247 (today's stock price) but I only need ~60% of the capital to secure that position, and limit my downside exposure.

Pair this with writing CSPs just as Jeff does, to generate income. Highest risk is having double exposure to the stock if it falls dramatically, but I also maintain the uncapped upside potential.

Note: there's two legs here, if you want to call them that, but they are not dependent on each other; I can buy the LEAP without selling CSPs and I can sell CSPs without buying the LEAP. Each serves a different purpose, but both take a bullish view on the stock.

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