What are some downsides to buying a long dated call spreads on a single name or ETF after a major pullback?
For example if I buy a call spread on a single name with a $100 spread, my break even is 15% current market price, and the short end of the spread is close to the current market price.
If I am right, I make roughly 60% in a year, and if wrong I am holding an extremely beaten down stock. I could potentially also close out the short in that scenario and keep the long open for more risk.
Liquidity isnt great, and I will lose something on the buy and sell. Theta isnt great, and the delta is like 30. So a large move up in the short term will not result in a large gain immediately.