Mail Call: Your questions directed this episode.

Question from Jason Kruse: Is there a Bootcamp episode that discusses OI and how it can affect expiration moves? I hear people talk about max pain and pinning like it’s a conspiracy. Would love to hear real info about how it works.

Open Interest

• What is it?
• Why is it important?
• Why is it not important?

Pin Risk

• What is it?
• How prevalent is it?
• When should you be concerned?
• Is there really a conspiracy?

Question from Allen Manning:Hello everyone, I just started listening to the Options Bootcamp podcast, and I'm really enjoying it! I have a question about a strategy described in episode 20: Options in Lieu of Stocks. As a covered call alternative, I was interested in possibly buying a LEAPS with a 1 or 2 year expiration and selling monthly calls against it. When I looked up a few stocks and ran some preliminary numbers, I noticed that the cost to purchase a deep in the money LEAPS (about 80 Delta) option was usually higher than the total money I would make selling monthly calls for the duration of the LEAPS. What I did to get these rough numbers was to take the money earned from selling the initial 1-month call (after commission cost) and multiplying it by 12 or 24. I'm assuming one or more of these possibilities:

1. The method I used to get these figures is wrong, even as a rough estimate.
2. This strategy will only work with certain stocks/underlying that have optimal Greek numbers.
3. This method only works when assuming the underlying LEAP also appreciates in value to offset its own cost.
4. Commission costs make this strategy less successful (I have a TD Ameritrade account)

Any information you can provide about this strategy is greatly appreciated. Thank you, and keep up the good work on a great program!

Question from Ethan Kamen: My question may be a little basic for the esteemed Bootcamp drill instructors, but I would like to know about back spreads. It seems like the majority of the information online is devoted to ratio spreads. Is there a reason for this? Are back spreads not popular? Do you use them? If so, what scenarios are suitable for back spreads? Thanks for this show. I look forward to each new episode.

Back Spreads

• What are they?
• What is the use case for them?
• When shouldn't you use them?

Back spreads vs ratio spreads

• What is the difference?
• When should you use each?
• Are ratio spreads more common/popular than back spreads?

Question from Ilythian: What is the ideal time horizon for trading options? My typical stock trade lifespan is 3-6 months? I have heard many people describe options as short-term investments. Is my time horizon too long to be trading options?