Do you have the balls?

[samwise]

Eric would you recommend this strategy for other stocks or etfs like SPY? Why just WFC.

 

Well, I'm not recommending it to anyone.  I have WFC because I just do.

 

Fair enough. I shouldn’t have used the word  recommendation.

 

What I should have asked is: in what circumstances can one use this strategy? Have you used it before. Will the options prices actually be what you expect as prices crater, or will the implied vol rise.

 

WFC is cheap, I certainly like the LEAPS on it. But I looked at DFS, which is even cheaper on earnings, around mid 20s, the calls were in the 10s, which seemed pretty expensive to me. So in your hypothetical strategy, when (or if) WFC goes to 3x PE, you may not get that option price you had in the strategy.