Since you are making a directional play, you would want as much delta as possible. DITM puts (bearish) or calls (bullish) would do the trick, probably several months out for expiration. DITM have little extrinsic value, and basically move with the underlying. This is basically a stock replacement strategy. You can also do spreads to limit your risk, but cap your reward as well. Spreads will have lower delta because short option will offset the long option somewhat. However, long delta will work against you if you are wrong with the direction.
From:
Sent: Monday, June 21, 2010 11:14 AM
To:
Subject: [TheOptionClub.
Would like to get some suggestions for buying options in the following scenario:
If one knows whether the underlying will rise or fall during the next 3 weeks, but not how far it will go up or down, what would you do?
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