Stock replacement options. Jun 21, 2022 · Stock replacement is a trading strategy that involves replacing the purchase of stocks with deep in the money call options. Stock Replacement Using Options The stock replacement strategy is essentially exactly what the name suggests. The main purpose of the Stock Replacement Strategy is the reduction of overall portfolio risk through the replacement of stocks using deep in the money call options and then using the remaining cash for strategic hedging as the trade progresses. It uses calls by reducing risk while maintaining upside. With expert insights from John Marshall, the potential of CrowdStrike Holdings Inc, and Meta Platforms Inc is detailed. It’s a strategy that uses other financial instruments to effectively recreate the position of owning stocks. So what is the difference between buying the $5 strike and the $170 strike? Mar 28, 2024 · The stock replacement strategy is a trading approach that substitutes deep in the money call options for outright shares of stock, aiming to replicate stock exposure with less capital. It helps to recreate the position of owning stocks with the help of other financial instruments. The ZEBRA is a stock replacement strategy with all of the upside profit potential with a fraction of the risk compared to owning 100 shares of stock. Oct 19, 2020 · Stock Replacement Strategy Definition (investopedia. This article explores the intricacies of this strategy, including its mechanics, benefits, and examples. The Stock Replacement Strategy establishes initial position by buying deep in the money call options with at least 3 months to expiration (so that the underlying stock have enough time to move. I am looking at NVDA and it goes all the way to $5 strike price. The two main advantages of a stock replacement strategy are: 1. Feb 5, 2021 · The ZEBRA is a stock replacement strategy, among the other stock replacement strategies such as the synthetic long stock, risk reversal, and LEAPS. Jun 13, 2025 · S&P 500 Index gains prompt Goldman Sachs to advocate an investment strategy involving options. ZEBRA stands for Zero Extrinsic Back Ratio, a term coined by Liz and Jenny in their TastyTrade show. . com) - Stock replacement is a trading strategy that involves replacing the purchase of stocks with the purchase of its deep in the money call options. The Stock Replacement Strategy is an options trading strategy made possible through the leverage effects of stock options. Due to its simple application and key benefits, traders and investors broadly implement this strategy Oct 20, 2021 · Trading LEAPS as a Stock Replacement Strategy Long-Term Equity Anticipation Securities, often referred to by the nickname "LEAPS,” are options with expiration dates greater than one year from the day of trade initiation. 00 until 170. Investors may consider substituting stocks with call options now. Learn when to use the ZEBRA & how it profits. Does anyone have a stock replacement strategy, essentially instead of just buying the stock you buy a deep in the money call. Jun 13, 2025 · With the recent market gains, now may be the time for investors to consider buying call options as a substitute for stocks, according to Goldman Sachs. But when you look at the Delta they are all at 1. Nov 17, 2022 · About Stock Replacement Option Trading Strategy As the name suggests, the stock replacement strategy is an optimal and efficient way here.