Yes, there are plenty of situations where holding the stock itself outperforms holding or trading the options, especially when the movement in the underlying asset is steady, slower than expected, or simply not volatile enough to justify the cost and decay of options.
A classic example is when a stock appreciates gradually over time without large price spikes. In such cases, long-term investors who simply bought and held the stock often come out ahead of traders using calls or spreads. This is particularly true when implied volatility is high—meaning options are expensive—and the actual move in the stock fails to exceed what the market was pricing in. Even if the stock moves in the right direction, the gains from an option might be minimal or even negative due to time decay (theta), volatility crush (vega), or changes in delta.
Another situation occurs with deep in-the-money call options. While they behave somewhat like stock substitutes, they still carry expiration dates and may underperform the stock if the gains take time to play out or if you’re forced to roll or exit early. On the flip side, out-of-the-money options might expire worthless despite a small rise in the stock, meaning shareholders benefit while option buyers lose out.
Dividend-paying stocks are another area where owning the stock can be more rewarding. Holding the shares means you collect dividends, whereas most call option holders miss out on that income unless they exercise their contracts early, which often isn’t ideal.
Finally, in low-volatility environments or during sideways markets, stocks can drift higher slowly, whereas options bleed value. Traders betting on a breakout or big move often get wiped out, while patient shareholders quietly accumulate gains. So yes, there are many real and practical examples where owning the underlying stock is the smarter, more profitable play.
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