ZEBRA Strategy

ZEBRA offers limited risk - if the stock crashes, you can only lose the net debit (maybe $250-$500), not thousands like with stock. You get stock-like upside with defined downside. The trade-off is managing expiration and missing dividends.

A regular call loses significant value to time decay and has lower delta (moves less with stock). ZEBRA has near-zero time decay and ~100 delta. Over a 60-day hold, ZEBRA vastly outperforms a single call if the stock moves as expected.

The main catches are: (1) You must manage expiration by rolling, (2) Deep ITM options may have wider bid-ask spreads, (3) Structure is more complex than buying stock, (4) No dividends, (5) Possible early assignment on short call.

Generally yes - ZEBRA is a defined-risk debit strategy. Check with your broker to confirm, but most Canadian brokers allow debit spreads in TFSAs. You'll need Level 2-3 options approval.

Just the net debit amount. If the ZEBRA costs $2.50 ($250 per contract), that's your capital requirement and also your maximum loss. Much less than buying 100 shares of stock.

Calculate: (Long Call Delta × 2) - Short Call Delta. Example: (0.75 × 2) - 0.50 = 1.00. Use your broker's delta values or an options calculator. Target result between 0.95 and 1.05.

Get as close as possible. 0.95-1.05 is acceptable. If the best you can achieve is 0.90 or 1.10, the position will still behave mostly like stock. The 'zero extrinsic' goal is more important than exact delta.

Yes - roll based on time (21 DTE), not P&L. If your directional thesis is still valid, roll to maintain the position. If thesis has changed, close instead. The roll cost is typically small.

Options adjust for splits like all other options - strikes and quantities are adjusted to maintain economic equivalence. Your ZEBRA structure remains intact with adjusted terms. No special action needed.

Possible but not recommended. Legging adds execution risk. Better to enter as a single multi-leg order. If you must leg, start with the less liquid deep ITM short, then add the longs.

If assigned, you're short 100 shares. Your two long calls provide upside protection. Options: (1) Exercise one long call to flatten, (2) Keep short stock with long call hedge, (3) Buy back stock and keep calls. Assignment disrupts structure but doesn't create unlimited risk.

Primarily ZEBRA is for directional exposure, not hedging. However, Put ZEBRA can hedge long stock portfolios with defined cost. For hedging, protective puts or put spreads may be more straightforward.

Depends on risk tolerance. Conservative: Replace 20-30% of stock positions with ZEBRAs. Aggressive: Replace 50%+. Key consideration: ZEBRA requires active management while stock doesn't. Match to your management capacity.

Track total roll costs as a percentage of position value. Example: If rolling costs $1.00 per quarter ($4/year) on a $10 position, that's 40% annual 'friction.' Compare to dividend yield you're missing. Efficient ZEBRAs should have <10% annual roll cost.

Synthetic long (long call + short put at same strike) is better when: (1) You're okay with unlimited downside risk like stock, (2) Want simpler structure, (3) Can often enter for zero cost. ZEBRA is better when you must have defined risk.