by billb
6. April 2009 14:10
http://www.nypost.com/seven/04062009/news/regionalnews/lienny_dykstra_163150.htm
There's not much more to add from the title. He chalked up his DITM call buying strategy to a leveraged stock portfolio. Lenny apparently felt the stock market was a dangerous game so how could he ignore risk?
Lenny made it look easy when things were going up. I don't necessarily disagree with his strategy, it has a time and place for some people, but he touted it as nearly fool proof. He twisted the risk into "only the amount you paid for the call" which is 100% accurate. However, the amount you pay for a DITM option is quite a lot. True, it is less than the stock itself, but it's highly unlikely that you're going to lose 100% of your money in a stock. It is far more likely that you'd lose 100% of your capital in a DITM option.
I talk a lot about risk because to me it's far more fatal and doesn't get a lot of talk time in most circles. I'm aggravated by people who down play it.
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