Jim Cramer, host of CNBC’s Mad Money, discussed an options trading strategy called the “Stock Replacement Strategy“.
The main purpose of the Stock Replacement Strategy is the reduction of overall portfolio risk through the replacement of stocks using deep in the money call options and then using the remaining cash for strategic hedging as the trade progresses.
The two main advantages of a stock replacement strategy are:
1. A reduction in capital requirements, which provides the flexibility to redeploy cash in new investments.
2. It offers the benefit of the leverage of options to maintain greater upside potential on further gains.
We will show how easy it is to backtest the “Stock Replacement Strategy” using the OptionStack platform. And how to determine the optimal adjustments that maximizes your return.
Simply click the “Run Backtest” button below to automatically get started.