Episode
Cheap Call Options Are A HUGELY Expensive Mistake - MU Example
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- Sep 24, 2026
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- 813
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Summary
Are you looking to save time, make money, and start winning with less risk? Then head to https://www.ovtlyr.com.Learn more about OVTLYR: https://youtu.be/TUCbD5Kovlc Those cheap call options you're looking at could be one of the most expensive mistakes you make. Micron (MU) is the example in this video, but the lesson applies to call options on any stock . When you're bullish on a stock, it can be tempting to buy the cheapest calls available, especially when you can buy several contracts for the price of one deep in-the-money option. The problem is that the cheaper option may have a much worse risk profile. The first thing to understand is delta . Delta tells you approximately how much an option's price changes for every $1 move in the underlying stock. A 70 or 80 delta call will respond much more like the stock itself than a 20 delta call. Delta also provides an estimate of the probability that the option will finish in the money at expiration. That's why deep in-the-money call options can be so powerful for stock replacement strategies. They don't have to work nearly as hard for the trade to become profitable because a larger portion of their value comes from intrinsic value. Then comes the part that catches a lot of traders: time decay . The cheaper out-of-the-money call may look attractive because the upfront cost is lower, but much more of what you're paying is extrinsic value. Extrinsic value decays as time passes, and by expiration it goes to zero. In the example used here, buying the lower-delta calls can create dramatically more daily time decay even when you're trying to create roughly the same amount of delta exposure. That's why the more expensive option can actually be the cheaper trade over time . Break-even price matters too. Your break-even is the strik…