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Investment Strategies / Mechanical Investing
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Author: rayvt ✧🐝  😊 😞
Number: of 3959 
Subject: Re: Buying Long Dated Calls
Date: 07/30/2024 5:10 PM
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No. of Recommendations: 3
In the context of long calls, the advantage is that the lower the leverage (deeper in the money the strike is), the lower the implied interest rate on the borrow is

Roughly, but not exactly and not always.
Example, XSP on 7/17/24, expiration 6/18/26. XSP at 561.85
Assuming price 3/4 into the spread.
Strike  pseudo-interest rate
330 4.86%
340 4.88%
350 4.91%
360 4.93%
370 5.12%
380 4.67% <<<<< lowest rate. -32.4% ITM, 2.50X leverage
390 5.00%
400 5.02%
410 5.19%
420 5.20%
430 5.36%
440 5.52%
450 5.66%
460 5.81%
470 5.94%
480 6.21%
485 6.27%
490 6.33%
500 6.59%
510 7.09%
520 6.75%
530 6.98%
540 7.21%

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