Playing quarters in stocks

This is a theory I use when I play leap call options or a small priced stock like DPL dayton power and light or RGR strum ruger.

Basically quarters means 25 cents and out.

I track a stock back 10 years using its graph and compare the years looking for a consistant rise or fall in a consistant 3 month period.

I look at what the average rise is.

You must have at least a consistant 5 buck in a stock rise to play quarters with leap call options.

Leap calls that are good for at least 2 years and that are no more than 20 bucks out of the money will rise at a rate of 25-30 cents on the dollar.

In my experience this is what I have seen.


I have found that a 5 buck expected rise will give you a 3.50-4.00 buck play range

Since most options have a 50 cent spread between their bid and ask, a 3.50 move in the stock gives you a 75-90 cent rise in the leap option.

After the 50 cent spread is subtracted, you have a 25cent to 40 cent profit.

A stock option controls 100 shares, so the 25-40cent profit is worth 25-40 bucks per contract.

So 5 contracts means 125- 200 gross profit

Now most leaps I play cost 500-700 a contract, so five contracts cost 2500-3500.

So if you make 125 on a 3500 investment you made about 3.5% return.

If you do this 5 times a year, you made 15-18%.

Timing the sale is easy, you simply enter a good to cancel sell order,at your chosen price, 5 min after your buy order executes.

I have done this with stock options on high quality stocks like Ibm and Cat Caterpiler, and Dis Disney

I have done this with pure stocks like Rgr and Dpl