Although it is a less expensive way to own the
stock, there are at least two significant risks: (1) time decay will eat away at the
value of your
deep in the money
calls as time passes, and (2) the
stock could drop and then not recover before the options expire.
And in the fullness of time, as we have now come to realize, Toyota
stock has gone up a lot from that standpoint, and investors, which properly explains the kind of results we've managed to have in our mutual funds that Consuela referenced, is because a patient investor with the contrarian
value mindset I've talked about, as long as you're buying the
stocks on sale and not those that are offered on clearance, i.e., which nobody else wants ever — so we don't believe in distressed investing or
deep value investing, we're talking about quality companies that are available on sale — you can make what I'm going to
call performance statements in your portfolios, as opposed to what I'm going to describe what a lot of investors try to make, which is fashion statements.