StockFetcher Forums · General Discussion · Jim Cramer (Stock Replacment Strategy)<< >>Post Follow-up
25 posts
msg #83855
Ignore stockfetcher01
12/4/2009 3:43:13 PM

Hello eveyone,

I was hoping someone knows about the strategy Jim Cramer discusses in his new book. He basically proposes
buying DITM calls and selling the underlying stock short. He said this combination with the DITM call as a hedge is a winning play.

He doesnt do a good job explaining the details. I was hoping someone here could tell me more about the strategy and the ratios of shorts to calls etc.

Thanks Stockfetchers for any feed back,

SF01 from New orleans

4,738 posts
msg #83859
Ignore Eman93
12/4/2009 4:22:18 PM

I would paper trade it until you can make money at it...

You would need to figure out how much (etiher way) up or down the stock needs to move in order to profit....

You still need to manage the trade... If the stock goes up where do you cover...... if it goes down when do get rid of call option... all this needs to be planned out....

4,738 posts
msg #83860
Ignore Eman93
12/4/2009 4:25:24 PM

Coverd calls are prob the most easy to trade......

Find a high voltilty stock near the bottom of its range.... or any stock you are holding long term and sell the calls.....

You get paid for selling your stock.

6,364 posts
msg #103443
Ignore TheRumpledOne
11/22/2011 5:39:34 PM

Too funny...

485 posts
msg #103454
Ignore guru_trader
11/24/2011 12:29:54 AM

great post tro ... or, watch any of don harrold's videos ( on cramer and you'll be running away from cramer as fast as you can

230 posts
msg #103458
Ignore wkloss
11/24/2011 3:56:29 PM

Graphing this in OptionVue looks terrible.

Does anyone understand what his thinking is?

788 posts
msg #103475
Ignore gmg733
11/26/2011 9:27:03 AM

I have not read his book, nor will I, but sounds like a delta trade. Short 100 shares with a delta of -1 per share for an-100 position delta and buy Ditm calls to offset he negative delta. Stock goes up and gamma helps out the net position delta go more positive and have a long bias. It would have to be long dated calls so theta is not eating away at your premium.

Again I am guessing as I have not read the book. This is a market maker strategy to have zero net position delta and make money in changes in gamma. Some contend this is where the big money on he floor is made. You have no bias long or short, but make money when the position moves either way.

230 posts
msg #103483
Ignore wkloss
11/26/2011 5:29:28 PM


Can you give us any more information about how this thing is constructed? gmg733 makes a lot of sense with his post but I still haven't been able to graph this concept to where it makes any sense. It appears to take a major move to reach break even. It's a negative theta trade so it costs money every day while you wait for profitability.

How DITM for the calls? I tried strikes near 100 delta with no luck.


StockFetcher Forums · General Discussion · Jim Cramer (Stock Replacment Strategy)<< >>Post Follow-up

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