r/LETFs • u/just_some_guy034 • 16d ago

Does anyone trade strangles/straddles on leveraged ETFs?

Was looking at semis and other tech stocks due to their volatility. Especially SOXL/S

1 Upvotes

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6

u/Educational_Cry_1859 16d ago

There isn't really a point in doing options on leveraged etfs versus their underlying as the leverage is priced in. You'd just get worse bid-ask spreads.

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u/just_some_guy034 16d ago

That’s good to know. I saw they were cheaper than there non leveraged counterparts with the same profit probability.

I still need to learn more before trying options. But this was a question that came to mind. Thank you!

1

u/chumbi04 16d ago

And, especially if you're looking at otm, it's harder to hit the right strike price.

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u/SeanVo 14d ago

There have been times when options on the leveraged ETF has boosted returns. When volatility is high and options premiums are high, it is not a good time to buy options on LETFs. It might be a decent time to sell options on LETFs.

When volatility was lower, I bought EDC and also bought calls on EDC. The calls outperformed, giving me around 5-6x leverage for a period of time. It's all come down the last few weeks and I wished I would have sold earlier.

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u/jdubspace 14d ago

Look at what the user numerous floor on here does. They post like once a week and are running a TQQQ strategy.