I want to gain exposure to the underlying portfolio (long some stocks, while short some stocks) using options. While I have limited cash for margin, so I have a hard time figuring out the exp date and strike prices.

I do realize that at a given expiration date, the in-the-money options tend to provide higher delta-theta ratio. And a long expiration date option will suffer less from time decay. However, they are generally more expensive.

Say I want to gain a 3x leverage on the underlying portfolio(buy 3x shares, short 3x shares), which options, in general, shall I consider?

  • Computing leverage for options is explained here. Delta/theta makes no sense to look at.
    – AKdemy
    Commented Mar 1, 2023 at 16:49
  • A personal recommendation, if you have limited cash for margin, I am inclined to say it's best you do not play around with options and leverage.
    – AKdemy
    Commented Mar 1, 2023 at 17:01
  • @AKdemy - Yes, it's best for the inexperienced not to play around with option leverage. However, my take is that the OP wants to buy options. If so, long options must be paid for in cash so there's no margin involved. Commented Mar 1, 2023 at 18:47
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    Delta/Theta will be highest deep ITM because delta will be close to 1 and theta will be close to 0. I also don't see what relevance that ratio gives you.
    – D Stanley
    Commented Mar 1, 2023 at 19:37

1 Answer 1


You're dealing with opposing forces, which you highlighted. On one side you have theta decay. If you want to diminish theta, you have to buy higher delta options with longer expirations and they cost more. Essentially, how much of one do you want to diminish at the expense of the other. There's no one size fits all answer to this.

I'm just a retail guy so I don't have anything sophisticated to offer. My thoughts would be that in order to have 3x leverage in both directions, you need +300 delta in long calls and -300 delta in long puts.

Then, determine the cost of each position, the theta of each position and do so for all options. Now compare all (software or spreadsheet) and figure out what balance of these is in your comfort zone.

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