Greetings
I’ve been playing around with an idea that really seems too good to be true so I’m sure it has to be lol. I’d love to hear thoughts about what I’m missing here.
My assumption is that in the long term I’m bullish on equities and precious metals. Of course the market is unstable and anything could happen, however there are only a few times that the Nasdaq has been negative for more than a one year period. Of course there was the dot com crash however I do think that there has been a fundamental shift in our economy making a repeat of that unlikely.
So this is what I’m considering. Layering (monthly) 0.7 Delta LEAPS on the QQQ, and GLD as far out as possible (>800 days) then selling weekly ATM or 1 strike OTM calls against them.
1 DTE if the underlying has risen ITM close the entire spread and establish. This way I do not have assignment risk. If the underlying drops resell a new ATM call but always staying above my cost basis.
Looking at an example as I write this the QQQ 15Dec28 685 is at a 155 mid. The 10Sep2026 719 (ATM) is 5.34.
If the QQQ is flat to up that extrinsic arbratage is about 3.2% a week. Since my leap is a higher delta I’m in no jeopardy if the QQQ rises, I’ll only make money. If the QQQ drops I’ll harvest the extensic and be able to sell a strike as low as 714 next week due to my lowered cost basis make the same 3% and wash and repeat. This annualized out to be 156% a year at 3% a week.
Now if the market is in a sustained downturn soon after establishing my position I might not be able to keep selling calls under my basis and I’ll have to wait for a recovery. The worst case would be of course there not being a recovery for multiple years, but I do hold a long term bullish bias.
In a great case in 30 successful calls I’d have a risk free leap that even in an extended downturn could sell calls against.
How would you compare this idea to the standard PMCC selling .3 delta calls and closing/rolling for a loss when needed. What am I missing as there has to be something.
Thanks all