I'm interested in using options to add leverage while mitigating some (but not all risk) to long positions on underlying stocks. Basically adding leveraging to a value investing approach thats worked for me.
Is there a feasible way to synthesise a buy, hold and forget (for two years anyway) strategy with options (or any other derivatives) that still provides leverage and some downside risk mitigation. I guess what I'd like to do is generate the equivalent of a partially hedged share portfolio.
e.g. If I wanted to go long on XYZ ltd, their shares are $10. Instead of buying 50,000 shares for $500,000, I'd like control 50,000 shares using $50,000, and also somehow limit my risk to around that initial $50,000 outlay.
Assume the shares are currently at low volatility (25% say) and currently not trending (or trending sideways).
The most obvious approach is to buy moderately ITM calls but there's still a fair bit of theta in those (only to be expected I guess). But is that the most sensible way? The other would be to use calendar spreads of some sort, with mixed strikes and dates, which would give some payback for a short term sideways view to fund the longer view I suppose.
But I'm pretty novice at the options stuff so curious to hear the thoughts of others on this.
Thanks for any ideas.