Is there a way to replace long stock with options? By buying a 2 SD in the money call, we are able to mimic the performance of long stock with only 10% of the capital requirements.
The problem with this, is that even though theta is very low, over time, it can add up to substantial amount.
The further in the money you buy the call, the less theta exposure you have, but your capital requirements go up.
Bottom line, nothing is free. If you decide to replace stock with a call to reduce capital requirements, that comes at a cost: theta.
Check out the segment as Tom and Pete explain this idea in depth.