Awesome, LEAPS are one of my favorite strategies right now. Pick a stock you’re bullish on and hold it for a couple years. Roll it one year from expiration.
@@lloydaurion-gaming46 the option will get adjusted with it. Like when AAPL split, my 1 AAPL LEAPS at the $400 strike became 4 AAPL LEAPS with a $100 strike.
Following your methods, I was able to recover all my losses in 6 months. I lost money because I was young and dumb reading too much WSB, and now I have positive cash flow after learning from your tutorials how to use LEAPS. Understanding extrinsic and intrinsic values are still on my to-do list, so I keep rewatching your videos until I will get it :) Thank you, I love you!
I'm very fresh. And I see its importance but get very confused between the 2. Can you break it down in simple terms? Short and sweet, not in nerdy jargon lol
I just want to say thank you for all that you've doing. Ever since I started investing, everyone has told me "don't trade options because they're dangerous". Your content gave me the confidence in starting to conduct covered calls and cash secured puts to generate additional income. Now with this video, I'm ready to branch out and give leaps a try. I learn so much from your videos!
I’ve learned so much about options, watching your videos! I’d say the majority of my options profits, are thanks to you. I’ve even gone back to watch the “options for beginners” video more than once. I found it helpful to watch, then get my feet wet, buying a call or 2. Then I went back to watch the video again to build on what I may not have learned the first time I watched. Keep up the great work!
Absolutely great teaching! The past couple months I’ve slowly been learning about options, and Friday at close I made my first $50, and reinvested into one apple contract! Slowly but surely~
Which platforms let you borrow against your option positions? With 100 shares, it seems I could leverage up 30-100 more with margin. But I know many platforms won’t let me take margin against equity in an option. That would balance the leverage argument. risk is margin call vs worthless option.
Also California would destroy me with taxes unless I exercise, but then I lose the extrinsic value unless I exercised right before expiration but then I lost the ex anyway
@@MeetKevin Go to Vegas like Graham Stephen, it has a california vibe but less of the negative aspects. I personally lived here most of my life it's pretty great besides the summers.
Best stock content on RUclips I came into the stock world a noob and decided to try and figure out how to make this not only interesting to me but profitable. You having and sharing this knowledge has been extremely helpful. Thank you.
@@nicky168 profit potential *** is what I meant. When you buy contracts with out of the money strikes, they gain more IF the stock moves in the direction you hoped. They’re cheaper as well. Little more risky obviously but the profit potential is higher. It’s like buying 10 contracts with $5k further from the money as opposed to 5 contracts with $5000 closer to the money or in the money.
Great explanation. LEAPS are great for everything you said and you can also sell PMCC's along the way for premium at lower cost. LEAPS can only be tricky with a global market frame shift event like in March of last year especially if your contract is too close to expiration and you lack the time to ride the recovery that owning 100 shares of the underlying would allow. For that reason I tend to not hold them all the way or too close to expiration. Ideally look for a sweet spot to sell where there's still liquidity so you don't lose all the EV and before rapid theta decay takes place.
Adam is brilliant. Love his videos. I know it all but he brings extra precious clarity to all those cluster mess to learn topics. I would watch Adams video every day if he decided to make (and he should). My 16 years old daughter loves his videos too. Thank you, bud!! Great job!!
You've taught me 90% of what I know about options. Started watching your videos about 2 months ago, and I sold my first options this past week. Wanted to be sure I knew what I was doing before yeeting my money into the abyss. That said, seems like LEAPS are perfect for PMCCs. And, it seems like the others in the comment section had that same thought. Thanks for the continued motivation to learn about options and investing!
Adam: Thank you for this content. I'm probably not in your target audience, but wanted to let you know I am learning a great deal from you. This video especially has lit a fire under my arse...in a good way!! You're a good man for sharing your knowledge here for free. Thank you. Watching some of your more recent videos I saw that you were having some health issues and wanted to wish you the best on that front too. Hope to see you fully recovered soon!
First off, such a great video. The whole beginner's playlist is top drawer. I had a question regarding the EV as a % of premium. TLDR: Why am I seeing a much higher EV as a % of premium (2% vs 12%) for the same stock (AAPL) with the same delta (0.95), similar DTE (~1.5 years), and lower implied volatility (39% vs 29%)? Using this approach for the current AAPL stock price ($255 as of Dec 24), the EV (as a % of the premium) for a LEAPS option with a DTE of 544 days is 12% (EV / premium), versus the 2% in the video. Stock comparison details: Stock: AAPL Date: Jan 2021 | Dec 2024 Stock price: $127.88 | $255.35 Strike price: $60 | $160 Premium: $69.40 | $108.40 IV: 67.88 | 95.35 EV: 1.52 | 13.05 EV % of premium: 2.2% | 12% Implied volatility: 39.62% | 29.47% Delta: 0.9582 | 0.9505 Theta: 0.005 | 0.02 (Theta is much higher now) Vega: 0.1485 | 0.3181 This seems to be consistent with a number of stocks I have analyzed for LEAP options, and can't work out what the % difference is so much higher now.
As a new trader whose first experience was 1-2 week long options and day trades (and lost a bunch while learning risk management and emotional biases) this is very interesting. Going to follow this strategy in paper while i build up enough capital.
Preach. Love this. LEAPS and covered calls are so reasonable of an investment strategy that it seems hard to justify *not* doing them for even the most conservative investors. Question: for those of us who can't afford a 0.7+ delta LEAP, what are advantages/disadvantages to using 1+ year OTM (maybe 0.3 or 0.4 delta) calls? I know you are banking on reasonably significant movement of the stock and theta is much higher (comparatively at least), but it seems like a happy medium given that I don't have enough to buy deep ITM. Thanks again for the great videos. I've learned more from you than just about anyone else.
Love your videos. Your videos have been extremely valuable to me learning different options strategies and the different risks associated with each strategy. You do a better job explaining options than any other RUclipsr I’ve seen while also making your videos entertaining.
This was a VERY WELL DONE video with explanation. The reason people DON"T like LEAPS is because they "Cost so much!!". But like you laid out, what you are paying for is MORE INTRINSIC VALUE and less extrinsic value. I think you guys do not understand. The whole reason you use a LEAP option is because it is a MUCH cheaper way to own the stock. Especially if the Delta is REALLY deep ITM like .95. Even if the stock goes down ,the most of a delta of an option can be is 1.00. So you can't lose that much there. Also if you are going to be doing this, there is ABSOLUTELY NO REASON you would hold the LEAP to expiration. The biggest reason is that the theta decay begins to increase exponentially. About 3 months to expiration. So you would roll this LEAP to a new LEAP and repeat the process all over again. Also the extrinsic value you are dealing with that he mentioned can EASILY be gotten in the first 1 - 2 months selling weekly/monthly options against that stock (or something else). By that point you have NOTHING to FEAR on losing the extrinsic value EVERY AGAIN in the future. If you are looking to hold something for a year or more this is a no-brainer.
@@randallewebb thanks! that's helpful. What would you say is a good range for Delta and Theta (if it matters at all) to do leaps? Would anything above .8 be good? Also, is it smart to always go for the furthest date out if it was allowed? Say, 2 years later.
Awesome explanation of LEAPs. You opened my mind.Thank you for that. I have ONE question: why should LEAPs be so deep in the money and have a delta of almost 1? I’ve done some calculantions and it seems that such approach requires a higher investment for a lower return than buying a LEAP -a long call with 1 or 2 years to expiration- at the money. Could you please explain this to me? I will start investing in LEAPs and this is a big issue still unclear to me. Thanks!! I will continue watching more of your videos.
Maybe I missed it, but I don't think you mentioned that you can sell calls against your LEAPS option , reducing even further the cost basis of your LEAPS option (poor man's covered call). Even if the underlying hits the strike price on the call you're selling, you have plenty of time left in your LEAPS option long leg to roll the short leg up and out for another credit. If you have a small account, this is the strategy you need to be using to grow your account.
I bought a call similar to what you were discussing for apple!! As a buy and hold investor, this is one of my favorite strategies. Thanks for sharing . My other favourite investment strategy with options is selling leaps (puts)at the money. Another way of buying stocks cheaper for great companies (if you know what is a good price for them:))
Having my money work for me as much as I have worked for it met equilibrium after I started earning passive incomes from the financial markets. Currently I'm retired but I was able to build and own a 6figure portfolio from my previous investments
It's still sad how only such few are earning passively or even know what passive incomes are, investing as we know it can be the best thing anybody can actually indulge into because it can make probably anyone filthy rich when done properly. Investing in the financial markets and earning of it is surely the right way to go, because in reality wealth is practically built from multiple streams of incomes and not just salary alone.
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares) which represent ownership claims on businesses, these may include securities listed on a public stock exchange as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowd funding platforms. But I don't seem to understand why I still can't earn trading stocks ,I find it more complex than I ever thought 6figure portfolio that's massive meanwhile I'm still struggling to make my first $1000 Lol😂🤦🏼♀️. Do you still trade? because you said from previous trades, not I'm like I'm trying to invade I just need some help
Both bullish and bearish runs have always presented tremendous opportunities for profits to be gained, and of course I still get to invest but not trade and that is how it has been all along, all my trades are done via a licensed pro trader even before I got into retirement. I invest with Noud Mikan a FINRA registered trader and risk analyst, he manages my assets and also trades on my behalf in the markets, lucratively his ingeniousness and experience have been the reasons why I keep accumulating profits in stocks, crypto and real estates. I invested in some couple of high growth stocks like SHLL,NASDAQ:VRTX and I've made over a $million from long term investments, currently I'm earning an average of $67,000 monthly and that comes mostly from dividends and crypto alone. Noud has been a very astounding financial advisor 💙
@@philcrowley007 Some months ago I was watching this video as a newbie and that was how I came across your comment, couple of weeks after partnering with Mr Noud I can boastfully say he helped me in procuring profits from the foreign exchange markets and as of now I already have about $65k in my investments account and that is from a total of 3 payouts. The amount of financial advise I keep receiving under his guidance has been very helpful, I'm only here to show gratitude and to reaffirm that his trading system is indeed very profitable and his 1 on 1 approach has perfectly suited my expectations. Good man
Best video on this topic I’ve seen- thanks. Would love to see a video expanding on this topic, especially selling covered calls on LEAPS (instead of owning 100 of the underlying).
These videos are so great Adam. As I close in on 100 shares of my long VOO position and also grow the portfolio value to the point where a LEAPS option would make sense to purchase at ~10% of the portfolio's value, I constantly refer back to videos like this and your videos covering Covered Calls and Poor Man's Covered Calls and they get me very excited. You are without a doubt the best creator on the platform for learning about options, and just an entertaining guy to listen to even if the video topic doesn't interest or pertain to me. Hoping you and your brother make a full recovery and come back stronger than ever. Until then I will continue dumping likes and views on your vids. Take care!
This is how you take a small account and literally make it explode safely. I am doing this right now with NIO. I have 3 calls that expire January 2022 and I'm already at 50% return and I bought them 3 weeks ago. The game is insane.
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. And I'm making so much from my investments...Having profitable Investments are the best than savings...DO you know the feeling of waking to a rise in your portfolio or having passive incomes from your monthly investments in the online market??
"Now that's the LIFE"😋😋..I want myself a comfortable life after retirement,Heard much about investments and how lucrative it can turn out..Would be sweet having an investment plan that's lucrative and profitable too..How have you been making incomes
While in retirement making money in the online market has been my only source of income since I make so much investing in it..Invested in some couple of high growth stocks like SHLL,NASDAQ:VRTX and I've made over $1.1million over the past years under the aid of a financial trade analyst Hovik Morten.Who somehow keeps making me cool digits from my investments,I invest ($11000) in dividends under Hovik monthly and I yield profits of ($29000-$35000).
I'm a year and 2 months in the market...Some of these are my dividend stocks AMZN,TSLA,NIO,BNGO and I've been getting fat pay from them working with pro Hovik,my portfolio keeps rising positively having Hovik invest for me...Just got paid today🤑(Having my portfolio already at 390k)I own a house in Brooklyn.I invested into currency pairs earlier this year.Hovik got me some bonds and ETF's... real solid ones now I'm already getting way paid.
While I'm a huge fan of stock picking,I have made a few rather modest investments in individual companies.There are so many stocks going to rocket in the long run..I put $150k into some growth stocks with Mr Hovik Morten who handles my investments..some of my picks are AAPL, BNGO, NASDAQ, TSLA, I've gotten 88% on returns so far this year(getting my portfolio at 630k),I'll keep holding to see where it goes and how much I'll still earn
Adam: Question for you. You mentioned averaging down if say the stock pulls back (let's just say 30%). What exactly do you do? Reason I asked is that you said you'd buy a new leap (I get that part) and then something about making the old leap worthless. So what would you do with that old leap, sell to close? Or would you continue to hold it...for whatever reason. Thanks in advance, love your work. You are very gifted at explaining it concisely and yet multi-faceted. Hope things go well with the home purchase.
I started actively investing during GME surge and today after watching your videos for 2-3 hrs straight, I am comfortable to tip toe into options. Thank you
Wow! This video is outstanding. You've earned yourself a subscriber. You're so right, why don't more people do it?... because it requires more brain power, but really it's not that complicated. I understand so much more now I've watched this. Loved it
Why would anyone sell leaps (calls)? How does the writer profits? Is this some equivalent to shorting the stock, and getting the extrinsic value as a bonus?
I would think this is the case. Furthermore, it might make more sense to write LEAP than to short for a mid to large-cap stock, since it is unlikely to drop below however deep in the money you set the LEAP to be.
The volume for LEAPS is pretty low but market makers and large institutions sell these as hedges against large downturns. I buy almost exclusively $SPY and $AAPL leaps (two of the most liquid options in existence) and there’s still only ever maybe 50-100 open interest on the DEEP ITM ones I want. You almost always have to meet the ask vs the bid to start out.
Great vid. Would love to see a tutorial on this similar to the covered call tutorial you did with thinkorswim, where you show the different possible outcomes.
Hi Adam, I really learn a lot from your videos, thank you so much. One question about LEAPS, please: One difference between buying a stock and buying a LEAP on that stock is the equity, if you buy that stock, vs. no equity for the LEAP. What do you think about this? Or maybe I just don't understand something basic about LEAPs?
My brother you are on point with this. I've just started doing option trading and it has been an uphill steep curve to climb. Thankfully I look at my loses now as the cost of learning the game I even even more determined to have a solid understanding of how to play. Now off to watch "How to trade like a God"
Would you still incur a taxable event if you exercised your leaps and kept the shares? In that case, you aren't realizing your gains yet. You just put in a fraction of buying power in order to delay paying for 100 shares.
@@futureofvegas Just remember that you then need an additional year before you sell before you're taxed at long term capital gains. If you sell before then it's taxed as regular income and they use your cost basis from where you started the option to decide your profits I believe. Not a tax professional, this is just how I interpreted someone's explanation on it, so take it with a grain of salt.
@@ltpotter all good brother!!! Hey this is a forum for expanding and learning. I'm a super long term investor so I'm not necessarily worried about taxes but the point should be noted if that is the case.
@@ltpotter i personally want to get shares for the cheap, and sell calls against them to collect premium to reinvest so my goal is to acquire shares, but sell options.
No dividends when owning calls and stock splits like Nvidia or tsla can be tricky since you probably need to sell to close or exercise to own shares for the events mentioned above. For the buying power you get is worth it.
There are many ways you can short a stock. I recently like using ZEBRAs to create synthetic short positions. You get the 1:1 gain to the downside; but have a max loss of the debit you paid to enter the trade, You could buy leaps, but to be a synthetic short, you'd have to buy at .9 delta which could take quite a bit of capitol.
Hey Adam. Just want to thank you for your videos, they are really cool! You explained LEAPs so well that I decided to give it a try. I bought Tesla options in April not too deep in the money though. Holding it up until now. 40% return so far. Thank you again, now I have started to understand some strategies. Continuing to follow your advice.
what would it look like if you cant sell your option. doesnt robinhood automatically sell your call at expiration if you cant afford to buy the shares? what do you do if you cant afford to exercise?
I'm not an expert, so correct me if I'm wrong. I'm guessing RH would sell your leaps, or they would exercise it and you'd owe money, showing a negative balance you'd have to pay ASAP. However, you will always be able to sell your contract, just at not the price you'd like. Algos will price accordingly so that they can benefit off of a wide bid-ask. Picking an underlying with no volume/interest and a call that is very deep ITM will result in a wider spread. It's one of the small drawbacks of buying a leap. You buy a leap, paying more than the mid-price and later on sell less than the mid-price. . . but hopefully, the underlying has risen to where you have an overall greater increase on return while only putting a fraction of money up in the first place.
It differs from broker to broker, but basically either the broker will exercise for you and hold it themselves, or just find you a buyer at a certain % lower than the actual value of the option’s intrinsic
you either sell the option or you let it expire worthless. You should be selling near term calls against the long term calls you have. You can use the money gained from near term calls to buy the shares.
What are some good measures to know if a LEAP call is overpriced? I know it depends on what an individual assumes is overpriced, but I'd love some guidelines or other resources I could learn from before I buy one.
How would that work if the covered call went bad and got exercised? Would Robinhood automatically exercise your call and then sell the shares at the covered call price, still netting a profit?
@@Failed4life_RS Any competent broker would not do such a thing. You would lose all of that extrinsic value. What this person is refers to is Poor Man's Covered Call(PMCC). You don't want the short to be exercised since you're trying to make some side passive income and reduce the overall theta of your long call. So you want to sell a bit OTM. In case an exercise of the short occurs you can buy the 100 stock and lose the difference between the strikes - the premium you received. Just make sure you sell before the 1 hour before the market close and take the loss if it goes way above your strike price you can make it back later with the premium. It wont be much of a loss either since your long premium will increase due to the delta. If your long call does not have much of extrinsic value anymore then it's likely that the broker will exercise it. You would profit either way.
@@Failed4life_RS It is called diagonal spread, you buy longer dated ITM call and sell shorted dated OTM calls but you need a marginable account for this.
I was just reading an article about LEAPS online, and they mentioned that implied volatility (vega) also impacts your final profit. It may not have a massive impact on profit, yet it's good to get in low if you see an opportunity. I'm quite new to LEAPS, but your video drastically helped my understanding. Keep up the excellent content!
thanks for explaining this so well, but just one question from me; what is a good in the money strike price to choose for this LEAPS? How deep is deep?
Man your videos are awesome and i come back whenever im lost with options. You get me understanding then i get lost and gain and then i get it again then i get lost again....you get the point but you explain it the best IMO
Hi, Thank you for another great lesson. Is it profitable to buy OTM leaps?? Like i bought 1yr OTM leaps and sell it after 6month. How can i calculate profit/Loss??
How would a good Dividend Stock impact this scenario?? @Don, thought about the same thing. Really not knowing if we can trust the entire market over the next yr.?. Good Companies strong stock's, dividend stocks, some ETFs and Crypto's about to be theonlything I think we'll want to maintain. Unless, you a big money day trading guru., the LEAPS Lonng term Option plan here, is looking lucrative. and saving on them taxes is something you should always keep in mind if you're planning on doing it right 🤙🏼
Thanks, great video. The only thing else I would add as the negative to a LEAPS is if the stock offers a dividend you don't collect it as you don't own shares, just the contract. So for example, apple offers .82 (a year) per share. So you will be missing out on those and the person who owns the shares will collect them. Roughly speaking 82 dollars a year or an additional ~164 if you held through the entire 2 years...not exactly since based on expiration you would miss out on at least 1 quarter or so of dividends. This doesn't impact a stock like apple as much since the yield is so low but it can be something to consider if you were looking at an option on stocks that pay a descent dividend. This is further mitigated by the fact as you pointed out that you aren't actually investing enough money to get the 100 shares worth of dividend, actually closer to 50 or 55 shares which would cut the dividend value in half. However, I did want to point this out for those considering it.
16:10 Adam: "I don't know why people do this more often. Maybe because it requires a little extra brainpower." Me: "Adam, they're using r/wallstreetbets. What did you expect? lol"
I know it's highly unlikely that you will reply, hopefully someone can chime in. To make the example easier I am holding a 70$ aapl call for Jan 2023 when the time comes if I exercise and sell do I incur short term capital gains since I only held the shares 5 minutes or does the act of buying the contract a long time ago constitute me owning the shares from that date forward? Thank you to anyone who can help! As always I love your videos!
So I have a question.... when should you sell a deep ITM LEAP option to maximize profit? do you hold until you're comfortable to sell or do you buy the contract and sell it immediately? I think I know the answer but I want to be sure.
Not sure what you mean by dream? I sell Covered Calls on LEAPS for 5 to 10% monthly income that I then buy crypto currency with lol. You can Zoomer the Boomer practices. BTC from $5K to $40K this year has me slapping my... Well, let's just say 2020 has been the best investment year of my life.
@@ayomide9887 Watch all the videos on this guy's channel, but the two strategies I use personally, research Cash Secured Puts and the Poor Man's Covered Calls (PMCC). Some RUclipsrs also call them Synthetic Covered Calls or Surrogate Covered Calls, but they are all just a Poor Man's Covered Call (PMCC). Cash Secured Puts are my absolute favorite investing tool, but PMCCs are fantastic for stocks you are Bullish on long term but want to make income on while the underlying LEAPS grows with the stock. Remember, trading has many risks, educate yourself on the type of investment that fits your goals, otherwise it's just gambling and you might as well go to a casino. Watch as many videos as you can on PMCC and Cash Secured Puts. I have been using them for years but I still watch videos on them to see how others perceive them and their risks and sometimes I am inspired by what someone is using the positions for, ideas that have been productive. Have a good 2021 and be responsible. Trading is a business just like running a hair salon or coffee shop.
If I ever have enough to buy 100 shares of a stock I already want to own, I just buy farthest possible leaps at a price that allows me to buy 2 contracts.
I have a question about huge options contracts I am seeing and need help interpreting them. I have been watching TSLA for the last week and see a group of contracts go through at the exact same time (so clearly it was set up as a credit spread or something) .... here is one I saw today at 09:15:07 17MAR23/170C: 4650 contracts at $8.84 17MAR23/130C: 4650 contracts at $31.69 19MAY23/180C: 4650 contracts at $12.53 19MAY23/210C: 4650 contracts at $5.76 19MAY23/120P: 4650 contracts at $6.25 In ThinkOrSwim, I don't think I have a way to know whether the person setting it up was the writing or buyer. So I would have to assume that they bought the 130C and sold the rest? BTW, take your time in answering. I plan on being a member for at least 12 months!!
It’s impossible to know. That’s the limitations of options flow. You often here “$100,000 of puts were bought!” But you don’t know if it’s btc, part of a spread, or some other more complicated strategy. But given the similar strikes, it’s likely that most were call spreads. Although the puts are a wild card. Even still, you don’t know for certain which were opening and which were closing positions.
Assuming that close to expiration, the option goes deep ITM, which is what we want with LEAPS. . Whats the benefit of building up this large Intrinsic Value? What does the option traders gain, if they decide not to exercise at expiration? What if the traders don't have the money to exercise, what happens to the Intrinsic value? What is the point to even own LEAPS if we don't exercise? Am i missing something here!!
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Excellent video! The only thing I'd point out is when you say WSB is using weeklies and the breakeven is high, in most cases they are holding on to the option for a few hours or a few days, collecting value from a big move or hype around a stock, they typically don't hold them till the breakeven stock price.
Maybe, maybe not. Regardless of breakeven at expiration, theta is a high % of the value of the option so things have to move quick. If you browse the losses on WSB, it’s pretty apparent that they hold them for more than a few hours. And if buying weeklies, a few days is enough to destroy them if the stock doesn’t move fast. And a LOT of people trade weeklies.
You can't buy 100 shares if you don't have the money. You have the option to exercise but you need the capital to do so. Plan on selling your option unless you have the capital to exercise
Wow nicely done! I own lots of LEAPS on Tesla with strikes at $180, $900, $1300, $1600 and $1700. I was thinking of selling off the $180 strikes and buying shares so I could sell covered calls but wow you completely sold me on keeping those $180 strikes. Thank you! Randy
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Disagree: it's riskier owning call options. Invested amount x can be 100% lost with either, but call options yields a 100% loss at anything less than a very specific price or at a very specific time, whereas stocks only result in a total loss if it reaches 0 (extremely unlikely in an index) and even if the stock did reach 0, you have the ability to wait as long as you want to see if the value will go back up, something you don't have with options. Call options can result in a total loss if the price is far above 0 at "near" expiration. Therefore you are wrong.
I like this breakdown. I play LEAPS, although sometimes the bid/ask spread is too wide to be filled, or the option is too expensive. However, I was playing mine closer to ATM because I'm not made of Bitcoins. More downside protection, at the loss of upside for the first few dollar gains.
This is THE real life wall street bets cartoon guy!🤣
Wahahha!
The Kid
🤣
100% love this guy though.
He has a twin. If he was WSB mascot, one could be "Calls" and the other "Puts".
This is the most valuable RUclips channel I've ever used. I wonder if this person realizes how impactful these videos are
Check out Blaze Capital
This is damn smart... everytime i learn something new I'm shocked at how much more there is to learn. Thanks for the awesome vids.
@Improvement pill No
Facts
Exactly what i was thinking 😍
Then you become more aware of the things that you don't know, so even though you've learned a lot, you feel like you know less. Human psych is funny
Awesome, LEAPS are one of my favorite strategies right now. Pick a stock you’re bullish on and hold it for a couple years. Roll it one year from expiration.
@Kamikaze Cash watched ur LEAPS video when it came out. Between these two videos feel like I’ve got a good understanding of it
You and Adam are where I have learned options. Love the wsb lingo from your videos while Adam is more technical :) imo it’s good to learn both.
Also to you or Adam: when a stock split occurs, what happens to an option? Like the strike price and anything else associated with an option
@@lloydaurion-gaming46 the option will get adjusted with it. Like when AAPL split, my 1 AAPL LEAPS at the $400 strike became 4 AAPL LEAPS with a $100 strike.
@@KamikazeCash oh I see thank you. I figured that would be how it worked. I just wasn’t completely sure if options worked differently
Following your methods, I was able to recover all my losses in 6 months. I lost money because I was young and dumb reading too much WSB, and now I have positive cash flow after learning from your tutorials how to use LEAPS. Understanding extrinsic and intrinsic values are still on my to-do list, so I keep rewatching your videos until I will get it :)
Thank you, I love you!
I personally love that you cover extrinsic and intrinsic value in most videos. New Option traders NEED to hear it and understand it. Thank you sir!
I'm very fresh. And I see its importance but get very confused between the 2. Can you break it down in simple terms? Short and sweet, not in nerdy jargon lol
I just want to say thank you for all that you've doing. Ever since I started investing, everyone has told me "don't trade options because they're dangerous". Your content gave me the confidence in starting to conduct covered calls and cash secured puts to generate additional income. Now with this video, I'm ready to branch out and give leaps a try. I learn so much from your videos!
I’ve learned so much about options, watching your videos! I’d say the majority of my options profits, are thanks to you. I’ve even gone back to watch the “options for beginners” video more than once. I found it helpful to watch, then get my feet wet, buying a call or 2. Then I went back to watch the video again to build on what I may not have learned the first time I watched. Keep up the great work!
Absolutely great teaching! The past couple months I’ve slowly been learning about options, and Friday at close I made my first $50, and reinvested into one apple contract! Slowly but surely~
Rainititan@gmail.com)
Where are you from
Which platforms let you borrow against your option positions? With 100 shares, it seems I could leverage up 30-100 more with margin. But I know many platforms won’t let me take margin against equity in an option.
That would balance the leverage argument. risk is margin call vs worthless option.
Dang meet Kevin is here.
Also California would destroy me with taxes unless I exercise, but then I lose the extrinsic value unless I exercised right before expiration but then I lost the ex anyway
Even the best of us are still trying to learn
@@joshuamerrill3959 or I just need another reason to leave California
@@MeetKevin Go to Vegas like Graham Stephen, it has a california vibe but less of the negative aspects. I personally lived here most of my life it's pretty great besides the summers.
Best stock content on RUclips I came into the stock world a noob and decided to try and figure out how to make this not only interesting to me but profitable. You having and sharing this knowledge has been extremely helpful. Thank you.
I mostly trade leaps but I’ve never tried going so deep in the money. Thank you for explaining this so well! ❤️
@@Steve-sz4bh why is that?
Buying leaps deep in the money reduces the upside potential and they cost more.
@@Steve-sz4bh you mad? 😂😂
@@cm88__ny how is the upside potential reduced?
@@nicky168 profit potential *** is what I meant. When you buy contracts with out of the money strikes, they gain more IF the stock moves in the direction you hoped. They’re cheaper as well. Little more risky obviously but the profit potential is higher. It’s like buying 10 contracts with $5k further from the money as opposed to 5 contracts with $5000 closer to the money or in the money.
Great explanation. LEAPS are great for everything you said and you can also sell PMCC's along the way for premium at lower cost. LEAPS can only be tricky with a global market frame shift event like in March of last year especially if your contract is too close to expiration and you lack the time to ride the recovery that owning 100 shares of the underlying would allow. For that reason I tend to not hold them all the way or too close to expiration. Ideally look for a sweet spot to sell where there's still liquidity so you don't lose all the EV and before rapid theta decay takes place.
Market shift came to mind, seeing this video in 2022 (down market)
That cinematic desk rise though
Who cares
@@YouArentThatImportant I do
Was expecting the Imperial March to hit
Lmao. I laugh every time i see that part
Should have done it it slow motion!!1!
Adam is brilliant. Love his videos. I know it all but he brings extra precious clarity to all those cluster mess to learn topics. I would watch Adams video every day if he decided to make (and he should). My 16 years old daughter loves his videos too. Thank you, bud!! Great job!!
You've taught me 90% of what I know about options. Started watching your videos about 2 months ago, and I sold my first options this past week. Wanted to be sure I knew what I was doing before yeeting my money into the abyss. That said, seems like LEAPS are perfect for PMCCs. And, it seems like the others in the comment section had that same thought. Thanks for the continued motivation to learn about options and investing!
Contact him on
W.a.s.a.p
+1...3...4...6..3....5...8...7...9..6...6
This guy amazes me. I'm just glad he's on our side.
I’ve learned more from your channel than I’ve learned in all of school😎
1:58 smooth af nicely edited sir
Adam: Thank you for this content. I'm probably not in your target audience, but wanted to let you know I am learning a great deal from you. This video especially has lit a fire under my arse...in a good way!! You're a good man for sharing your knowledge here for free. Thank you. Watching some of your more recent videos I saw that you were having some health issues and wanted to wish you the best on that front too. Hope to see you fully recovered soon!
Great explanation and perfect timing man. I was just about to buy 100 shares of AAPL on Monday.
You could always buy 100 shares and then just sell covered calls. You have options
@@TylerLybarger no pun intended 😆
First off, such a great video. The whole beginner's playlist is top drawer. I had a question regarding the EV as a % of premium.
TLDR: Why am I seeing a much higher EV as a % of premium (2% vs 12%) for the same stock (AAPL) with the same delta (0.95), similar DTE (~1.5 years), and lower implied volatility (39% vs 29%)?
Using this approach for the current AAPL stock price ($255 as of Dec 24), the EV (as a % of the premium) for a LEAPS option with a DTE of 544 days is 12% (EV / premium), versus the 2% in the video.
Stock comparison details:
Stock: AAPL
Date: Jan 2021 | Dec 2024
Stock price: $127.88 | $255.35
Strike price: $60 | $160
Premium: $69.40 | $108.40
IV: 67.88 | 95.35
EV: 1.52 | 13.05
EV % of premium: 2.2% | 12%
Implied volatility: 39.62% | 29.47%
Delta: 0.9582 | 0.9505
Theta: 0.005 | 0.02 (Theta is much higher now)
Vega: 0.1485 | 0.3181
This seems to be consistent with a number of stocks I have analyzed for LEAP options, and can't work out what the % difference is so much higher now.
Did you explain what happens to the dividends? I might have missed it.
As a new trader whose first experience was 1-2 week long options and day trades (and lost a bunch while learning risk management and emotional biases) this is very interesting. Going to follow this strategy in paper while i build up enough capital.
Lmao I'm stuck at the acronym "P" in LEAPS come from anticiPation!! That made my day! Oh by the way love your videos, keep it up sir:) Best teacher!
I have watched a few of your videos now and this was by far your best explaination of intrinsic and extrinsic value.
Hi where are you from
Rainititan@gmail.com))
Preach. Love this. LEAPS and covered calls are so reasonable of an investment strategy that it seems hard to justify *not* doing them for even the most conservative investors.
Question: for those of us who can't afford a 0.7+ delta LEAP, what are advantages/disadvantages to using 1+ year OTM (maybe 0.3 or 0.4 delta) calls? I know you are banking on reasonably significant movement of the stock and theta is much higher (comparatively at least), but it seems like a happy medium given that I don't have enough to buy deep ITM.
Thanks again for the great videos. I've learned more from you than just about anyone else.
Thanks!
Thank you!
Love your videos. Your videos have been extremely valuable to me learning different options strategies and the different risks associated with each strategy. You do a better job explaining options than any other RUclipsr I’ve seen while also making your videos entertaining.
This is by far the best video on the subject. It really helped my understanding of leaps.
Owning 100 leaps on expiration: 0$
Owning 100 stocks: "I AM NOT FUCKING SELLING ON A LOSS"
Where are you from
Yes
The bot replies make no sense guys
And haha right I'll hold an L forever with shares
This was a VERY WELL DONE video with explanation. The reason people DON"T like LEAPS is because they "Cost so much!!". But like you laid out, what you are paying for is MORE INTRINSIC VALUE and less extrinsic value.
I think you guys do not understand. The whole reason you use a LEAP option is because it is a MUCH cheaper way to own the stock. Especially if the Delta is REALLY deep ITM like .95. Even if the stock goes down ,the most of a delta of an option can be is 1.00. So you can't lose that much there. Also if you are going to be doing this, there is ABSOLUTELY NO REASON you would hold the LEAP to expiration. The biggest reason is that the theta decay begins to increase exponentially. About 3 months to expiration. So you would roll this LEAP to a new LEAP and repeat the process all over again.
Also the extrinsic value you are dealing with that he mentioned can EASILY be gotten in the first 1 - 2 months selling weekly/monthly options against that stock (or something else). By that point you have NOTHING to FEAR on losing the extrinsic value EVERY AGAIN in the future. If you are looking to hold something for a year or more this is a no-brainer.
@@randallewebb thanks! that's helpful. What would you say is a good range for Delta and Theta (if it matters at all) to do leaps? Would anything above .8 be good? Also, is it smart to always go for the furthest date out if it was allowed? Say, 2 years later.
Awesome explanation of LEAPs. You opened my mind.Thank you for that. I have ONE question: why should LEAPs be so deep in the money and have a delta of almost 1? I’ve done some calculantions and it seems that such approach requires a higher investment for a lower return than buying a LEAP -a long call with 1 or 2 years to expiration- at the money. Could you please explain this to me? I will start investing in LEAPs and this is a big issue still unclear to me. Thanks!! I will continue watching more of your videos.
Maybe I missed it, but I don't think you mentioned that you can sell calls against your LEAPS option , reducing even further the cost basis of your LEAPS option (poor man's covered call). Even if the underlying hits the strike price on the call you're selling, you have plenty of time left in your LEAPS option long leg to roll the short leg up and out for another credit. If you have a small account, this is the strategy you need to be using to grow your account.
I bought a call similar to what you were discussing for apple!! As a buy and hold investor, this is one of my favorite strategies. Thanks for sharing . My other favourite investment strategy with options is selling leaps (puts)at the money. Another way of buying stocks cheaper for great companies (if you know what is a good price for them:))
Having my money work for me as much as I have worked for it met equilibrium after I started earning passive incomes from the financial markets. Currently I'm retired but I was able to build and own a 6figure portfolio from my previous investments
It's still sad how only such few are earning passively or even know what passive incomes are, investing as we know it can be the best thing anybody can actually indulge into because it can make probably anyone filthy rich when done properly. Investing in the financial markets and earning of it is surely the right way to go, because in reality wealth is practically built from multiple streams of incomes and not just salary alone.
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares) which represent ownership claims on businesses, these may include securities listed on a public stock exchange as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowd funding platforms. But I don't seem to understand why I still can't earn trading stocks ,I find it more complex than I ever thought
6figure portfolio that's massive meanwhile I'm still struggling to make my first $1000 Lol😂🤦🏼♀️. Do you still trade? because you said from previous trades, not I'm like I'm trying to invade I just need some help
Both bullish and bearish runs have always presented tremendous opportunities for profits to be gained, and of course I still get to invest but not trade and that is how it has been all along, all my trades are done via a licensed pro trader even before I got into retirement. I invest with Noud Mikan a FINRA registered trader and risk analyst, he manages my assets and also trades on my behalf in the markets, lucratively his ingeniousness and experience have been the reasons why I keep accumulating profits in stocks, crypto and real estates. I invested in some couple of high growth stocks like SHLL,NASDAQ:VRTX and I've made over a $million from long term investments, currently I'm earning an average of $67,000 monthly and that comes mostly from dividends and crypto alone. Noud has been a very astounding financial advisor 💙
Scam
@@philcrowley007 Some months ago I was watching this video as a newbie and that was how I came across your comment, couple of weeks after partnering with Mr Noud I can boastfully say he helped me in procuring profits from the foreign exchange markets and as of now I already have about $65k in my investments account and that is from a total of 3 payouts. The amount of financial advise I keep receiving under his guidance has been very helpful, I'm only here to show gratitude and to reaffirm that his trading system is indeed very profitable and his 1 on 1 approach has perfectly suited my expectations. Good man
Best video on this topic I’ve seen- thanks. Would love to see a video expanding on this topic, especially selling covered calls on LEAPS (instead of owning 100 of the underlying).
Genuinely one of my favorite youtube channels. Thanks for the upload man
Great tutorial. Question: when to exit out of LEAPS? Do you have another tutorial on that part?
This video has some of the most under rated wisdom on all of RUclips.
it came out 2 hours ago, how can i already be under rated?
@@TRW-Apprentice The wisdom has been around for a while my friend
@@TRW-Apprentice prolly meant the channel
These videos are so great Adam. As I close in on 100 shares of my long VOO position and also grow the portfolio value to the point where a LEAPS option would make sense to purchase at ~10% of the portfolio's value, I constantly refer back to videos like this and your videos covering Covered Calls and Poor Man's Covered Calls and they get me very excited. You are without a doubt the best creator on the platform for learning about options, and just an entertaining guy to listen to even if the video topic doesn't interest or pertain to me.
Hoping you and your brother make a full recovery and come back stronger than ever. Until then I will continue dumping likes and views on your vids.
Take care!
This is how you take a small account and literally make it explode safely. I am doing this right now with NIO. I have 3 calls that expire January 2022 and I'm already at 50% return and I bought them 3 weeks ago. The game is insane.
Nice, can I ask what strike price?
Oh I totally misread your question. My strikes are 45, 42, and 40 dollars for January 21st 2022 expiration.
Good for you man
You won’t be able to sell the options later because the open interest is virtually non existent. Are you ok with exercising them later on?
@@alexlee8639 yes I am. The point is to get NIO for the cheap.
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. And I'm making so much from my investments...Having profitable Investments are the best than savings...DO you know the feeling of waking to a rise in your portfolio or having passive incomes from your monthly investments in the online market??
"Now that's the LIFE"😋😋..I want myself a comfortable life after retirement,Heard much about investments and how lucrative it can turn out..Would be sweet having an investment plan that's lucrative and profitable too..How have you been making incomes
While in retirement making money in the online market has been my only source of income since I make so much investing in it..Invested in some couple of high growth stocks like SHLL,NASDAQ:VRTX and I've made over $1.1million over the past years under the aid of a financial trade analyst Hovik Morten.Who somehow keeps making me cool digits from my investments,I invest ($11000) in dividends under Hovik monthly and I yield profits of ($29000-$35000).
I'm a year and 2 months in the market...Some of these are my dividend stocks AMZN,TSLA,NIO,BNGO and I've been getting fat pay from them working with pro Hovik,my portfolio keeps rising positively having Hovik invest for me...Just got paid today🤑(Having my portfolio already at 390k)I own a house in Brooklyn.I invested into currency pairs earlier this year.Hovik got me some bonds and ETF's... real solid ones now I'm already getting way paid.
While I'm a huge fan of stock picking,I have made a few rather modest investments in individual companies.There are so many stocks going to rocket in the long run..I put $150k into some growth stocks with Mr Hovik Morten who handles my investments..some of my picks are AAPL, BNGO, NASDAQ, TSLA, I've gotten 88% on returns so far this year(getting my portfolio at 630k),I'll keep holding to see where it goes and how much I'll still earn
Reach Hovik
Adam: Question for you. You mentioned averaging down if say the stock pulls back (let's just say 30%). What exactly do you do? Reason I asked is that you said you'd buy a new leap (I get that part) and then something about making the old leap worthless. So what would you do with that old leap, sell to close? Or would you continue to hold it...for whatever reason. Thanks in advance, love your work. You are very gifted at explaining it concisely and yet multi-faceted. Hope things go well with the home purchase.
I started actively investing during GME surge and today after watching your videos for 2-3 hrs straight, I am comfortable to tip toe into options. Thank you
Are you still alive?
@@newsystem3667 Lol. yeah not too bad.
Wow! This video is outstanding. You've earned yourself a subscriber. You're so right, why don't more people do it?... because it requires more brain power, but really it's not that complicated. I understand so much more now I've watched this. Loved it
Why would anyone sell leaps (calls)? How does the writer profits? Is this some equivalent to shorting the stock, and getting the extrinsic value as a bonus?
I would think this is the case. Furthermore, it might make more sense to write LEAP than to short for a mid to large-cap stock, since it is unlikely to drop below however deep in the money you set the LEAP to be.
The volume for LEAPS is pretty low but market makers and large institutions sell these as hedges against large downturns.
I buy almost exclusively $SPY and $AAPL leaps (two of the most liquid options in existence) and there’s still only ever maybe 50-100 open interest on the DEEP ITM ones I want. You almost always have to meet the ask vs the bid to start out.
Good info. I've been debating whether or not to buy way in the money calls. Now I'm more convinced than ever to buy some on a red day. thanks
Great vid. Would love to see a tutorial on this similar to the covered call tutorial you did with thinkorswim, where you show the different possible outcomes.
Hi Adam, I really learn a lot from your videos, thank you so much. One question about LEAPS, please: One difference between buying a stock and buying a LEAP on that stock is the equity, if you buy that stock, vs. no equity for the LEAP. What do you think about this? Or maybe I just don't understand something basic about LEAPs?
These videos are exactly what I’m looking for. Thanks!
My brother you are on point with this. I've just started doing option trading and it has been an uphill steep curve to climb. Thankfully I look at my loses now as the cost of learning the game I even even more determined to have a solid understanding of how to play. Now off to watch "How to trade like a God"
THANK YOU!!! I wanted to get into leaps this week, this helps so much :)
Rainititan@gmail.com)
Thanks for all your work man ... taught me more in a few videos then months of studying
Would you still incur a taxable event if you exercised your leaps and kept the shares? In that case, you aren't realizing your gains yet. You just put in a fraction of buying power in order to delay paying for 100 shares.
You are exactly right brother. No taxes until you SELL. If you exercise, you are buying.
@@futureofvegas Just remember that you then need an additional year before you sell before you're taxed at long term capital gains. If you sell before then it's taxed as regular income and they use your cost basis from where you started the option to decide your profits I believe. Not a tax professional, this is just how I interpreted someone's explanation on it, so take it with a grain of salt.
@@ltpotter all good brother!!! Hey this is a forum for expanding and learning. I'm a super long term investor so I'm not necessarily worried about taxes but the point should be noted if that is the case.
@@ltpotter i personally want to get shares for the cheap, and sell calls against them to collect premium to reinvest so my goal is to acquire shares, but sell options.
No dividends when owning calls and stock splits like Nvidia or tsla can be tricky since you probably need to sell to close or exercise to own shares for the events mentioned above. For the buying power you get is worth it.
So if you wanted to short a company, would it be generally better to buy leap puts to limit your risk over just shorting? Thank you.
There are many ways you can short a stock. I recently like using ZEBRAs to create synthetic short positions. You get the 1:1 gain to the downside; but have a max loss of the debit you paid to enter the trade, You could buy leaps, but to be a synthetic short, you'd have to buy at .9 delta which could take quite a bit of capitol.
Hey Adam. Just want to thank you for your videos, they are really cool! You explained LEAPs so well that I decided to give it a try. I bought Tesla options in April not too deep in the money though. Holding it up until now. 40% return so far. Thank you again, now I have started to understand some strategies. Continuing to follow your advice.
hope you closed it while you were up as tsla is now 147
what would it look like if you cant sell your option. doesnt robinhood automatically sell your call at expiration if you cant afford to buy the shares? what do you do if you cant afford to exercise?
I'm not an expert, so correct me if I'm wrong.
I'm guessing RH would sell your leaps, or they would exercise it and you'd owe money, showing a negative balance you'd have to pay ASAP.
However, you will always be able to sell your contract, just at not the price you'd like. Algos will price accordingly so that they can benefit off of a wide bid-ask. Picking an underlying with no volume/interest and a call that is very deep ITM will result in a wider spread. It's one of the small drawbacks of buying a leap. You buy a leap, paying more than the mid-price and later on sell less than the mid-price. . . but hopefully, the underlying has risen to where you have an overall greater increase on return while only putting a fraction of money up in the first place.
Explanation about extrinsic vs intrinsic ends at 5:36 yw
That do you do if you lose the liquidity and don’t have the funds to exercise it?
It differs from broker to broker, but basically either the broker will exercise for you and hold it themselves, or just find you a buyer at a certain % lower than the actual value of the option’s intrinsic
you either sell the option or you let it expire worthless. You should be selling near term calls against the long term calls you have. You can use the money gained from near term calls to buy the shares.
What are some good measures to know if a LEAP call is overpriced? I know it depends on what an individual assumes is overpriced, but I'd love some guidelines or other resources I could learn from before I buy one.
Don't forget that you can also sell covered calls against your LEAPS.
How would that work if the covered call went bad and got exercised? Would Robinhood automatically exercise your call and then sell the shares at the covered call price, still netting a profit?
@@Failed4life_RS Any competent broker would not do such a thing. You would lose all of that extrinsic value. What this person is refers to is Poor Man's Covered Call(PMCC). You don't want the short to be exercised since you're trying to make some side passive income and reduce the overall theta of your long call. So you want to sell a bit OTM. In case an exercise of the short occurs you can buy the 100 stock and lose the difference between the strikes - the premium you received. Just make sure you sell before the 1 hour before the market close and take the loss if it goes way above your strike price you can make it back later with the premium. It wont be much of a loss either since your long premium will increase due to the delta. If your long call does not have much of extrinsic value anymore then it's likely that the broker will exercise it. You would profit either way.
gotta lower that cost basis, baaabbyy!
Adam has a video about poor man's covered call, I tried to post a link here but looks like links are not allowed or something.
@@Failed4life_RS It is called diagonal spread, you buy longer dated ITM call and sell shorted dated OTM calls but you need a marginable account for this.
I was just reading an article about LEAPS online, and they mentioned that implied volatility (vega) also impacts your final profit. It may not have a massive impact on profit, yet it's good to get in low if you see an opportunity. I'm quite new to LEAPS, but your video drastically helped my understanding. Keep up the excellent content!
Write my admin for financial advice
On investment in Crypto
W ha Sapp
+ 1 8 5 6 3 1 2 6 9 8 2
BRB selling my 64 shares of aapl and buying a 2023 LEAP. Thanks bro ur the 🐐
Are you actually going to do it?
i bought a aapl leap in sept exp 2023 and its already up 50% leaps are lit.
@@Eight_The_Great when did you buy it?
@@alexlee8639 in sept. its a jan 2023 exp
@sam chump because the math makes sense. Why not? Gonna sell covered calls to lower my break even price as well
thanks for explaining this so well, but just one question from me; what is a good in the money strike price to choose for this LEAPS? How deep is deep?
This man is the 🐐
You've got a sick channel as well with maz though! Looking forward to this weeks callout!
@@karmakillz4051 appreciate it, Kevin!! Thank you 🙏🏼
You and maz are 🐐 as well
@@robertoreyez428 Appreciate it a ton, Roberto!
Man your videos are awesome and i come back whenever im lost with options. You get me understanding then i get lost and gain and then i get it again then i get lost again....you get the point but you explain it the best IMO
Can you do a video on how options are taxed?
Like capital gains tax? Irs tax?
How the Premium is taxed. I hear someone say it wasn't, that it goes instead to reducing the base cost of the underlying
Hi, Thank you for another great lesson. Is it profitable to buy OTM leaps?? Like i bought 1yr OTM leaps and sell it after 6month. How can i calculate profit/Loss??
How would stocks with dividends impact this scenario?
How would a good Dividend Stock impact this scenario?? @Don, thought about the same thing. Really not knowing if we can trust the entire market over the next yr.?. Good Companies strong stock's, dividend stocks, some ETFs and Crypto's about to be theonlything I think we'll want to maintain. Unless, you a big money day trading guru., the LEAPS Lonng term Option plan here, is looking lucrative. and saving on them taxes is something you should always keep in mind if you're planning on doing it right 🤙🏼
@@ryanmac5708 no dividends as you don't own stock
Thanks, great video. The only thing else I would add as the negative to a LEAPS is if the stock offers a dividend you don't collect it as you don't own shares, just the contract. So for example, apple offers .82 (a year) per share. So you will be missing out on those and the person who owns the shares will collect them. Roughly speaking 82 dollars a year or an additional ~164 if you held through the entire 2 years...not exactly since based on expiration you would miss out on at least 1 quarter or so of dividends.
This doesn't impact a stock like apple as much since the yield is so low but it can be something to consider if you were looking at an option on stocks that pay a descent dividend. This is further mitigated by the fact as you pointed out that you aren't actually investing enough money to get the 100 shares worth of dividend, actually closer to 50 or 55 shares which would cut the dividend value in half. However, I did want to point this out for those considering it.
Write my admin for financial advice
On investment in Crypto..
W ha Sapp
+ 1 8 5 6 3 1 2 6 9 8 2..
16:10
Adam: "I don't know why people do this more often. Maybe because it requires a little extra brainpower."
Me: "Adam, they're using r/wallstreetbets. What did you expect? lol"
I love this video! Would you recommend me more material to master as a beginner in the LEAPS world before start trading? Thanks a lot!
Hmmm. Seems like we had the perfect opportunity to buy BABA leaps a few days ago
@Improvement pill SPAM ALERT 📢
I know it's highly unlikely that you will reply, hopefully someone can chime in. To make the example easier I am holding a 70$ aapl call for Jan 2023 when the time comes if I exercise and sell do I incur short term capital gains since I only held the shares 5 minutes or does the act of buying the contract a long time ago constitute me owning the shares from that date forward? Thank you to anyone who can help! As always I love your videos!
A well deserved like for this information.
You answered my question about liquidity which makes perfect sense. Excellent presentation.
low key flex with the table ℓσℓ
There was nothing low key about that.
Explaining this is more difficult than doing it. Bravo sir. Great job.. I could never explain this to people!
I've wondered this since the very second I saw an options spread
I watched this twice thank you for this break down my man Options Guru
Thanks for the feedback.....for more information *+1-6-1-9-6-1-4-1-2-5-7*
W •H•A•T•S•A•P•P.••••M•E 🔅 💯✨🌞.
If you think about it. The reason he makes money it’s because of that monitor. Buying such monitor will increase gains by 69%
So I have a question.... when should you sell a deep ITM LEAP option to maximize profit? do you hold until you're comfortable to sell or do you buy the contract and sell it immediately? I think I know the answer but I want to be sure.
Alternate title: Boomer disguised as zoomer secretly tricks other zoomers into buying shares-adjacent product.
Not sure what you mean by dream? I sell Covered Calls on LEAPS for 5 to 10% monthly income that I then buy crypto currency with lol. You can Zoomer the Boomer practices. BTC from $5K to $40K this year has me slapping my... Well, let's just say 2020 has been the best investment year of my life.
@@Slydeish bro how can I learn
@@ayomide9887 Watch all the videos on this guy's channel, but the two strategies I use personally, research Cash Secured Puts and the Poor Man's Covered Calls (PMCC). Some RUclipsrs also call them Synthetic Covered Calls or Surrogate Covered Calls, but they are all just a Poor Man's Covered Call (PMCC). Cash Secured Puts are my absolute favorite investing tool, but PMCCs are fantastic for stocks you are Bullish on long term but want to make income on while the underlying LEAPS grows with the stock. Remember, trading has many risks, educate yourself on the type of investment that fits your goals, otherwise it's just gambling and you might as well go to a casino. Watch as many videos as you can on PMCC and Cash Secured Puts. I have been using them for years but I still watch videos on them to see how others perceive them and their risks and sometimes I am inspired by what someone is using the positions for, ideas that have been productive. Have a good 2021 and be responsible. Trading is a business just like running a hair salon or coffee shop.
name checks out
@@Slydeish this is gangster advice man. I'm going to look into his vids a bit more. Can't just YOLO GME and PLTR to the moon forever
Dude you don’t know how much your videos have helped me learn options. Thank you so much, hope you get the best!
If I ever have enough to buy 100 shares of a stock I already want to own, I just buy farthest possible leaps at a price that allows me to buy 2 contracts.
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I have a question about huge options contracts I am seeing and need help interpreting them.
I have been watching TSLA for the last week and see a group of contracts go through at the exact same time (so clearly it was set up as a credit spread or something) .... here is one I saw today at 09:15:07
17MAR23/170C: 4650 contracts at $8.84
17MAR23/130C: 4650 contracts at $31.69
19MAY23/180C: 4650 contracts at $12.53
19MAY23/210C: 4650 contracts at $5.76
19MAY23/120P: 4650 contracts at $6.25
In ThinkOrSwim, I don't think I have a way to know whether the person setting it up was the writing or buyer.
So I would have to assume that they bought the 130C and sold the rest?
BTW, take your time in answering. I plan on being a member for at least 12 months!!
It’s impossible to know. That’s the limitations of options flow. You often here “$100,000 of puts were bought!” But you don’t know if it’s btc, part of a spread, or some other more complicated strategy.
But given the similar strikes, it’s likely that most were call spreads. Although the puts are a wild card.
Even still, you don’t know for certain which were opening and which were closing positions.
When I run it through a calculator, it appears that highest profit is if stock is at $171 by exp on 17MAR23. Breakevens at $138 and $196.
I have always known of LEAPS, but did not fully understand the benefits of this strategy! Thank you!
LEAPS or wheel strategy on SPY? What do you think is better?
Assuming that close to expiration, the option goes deep ITM, which is what we want with LEAPS. . Whats the benefit of building up this large Intrinsic Value? What does the option traders gain, if they decide not to exercise at expiration? What if the traders don't have the money to exercise, what happens to the Intrinsic value? What is the point to even own LEAPS if we don't exercise? Am i missing something here!!
Assuming there is no liquidity and I don't have enough funds to exercise, what happens then?
Then it's best to let it expire. You are just out the premium
This is bar far the most helpful RUclips video I've found on Leap Options.
Your first mistake was assuming I could actually afford to buy 100 shares of the stock lol 😂
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Excellent video! The only thing I'd point out is when you say WSB is using weeklies and the breakeven is high, in most cases they are holding on to the option for a few hours or a few days, collecting value from a big move or hype around a stock, they typically don't hold them till the breakeven stock price.
Maybe, maybe not. Regardless of breakeven at expiration, theta is a high % of the value of the option so things have to move quick. If you browse the losses on WSB, it’s pretty apparent that they hold them for more than a few hours. And if buying weeklies, a few days is enough to destroy them if the stock doesn’t move fast. And a LOT of people trade weeklies.
silly question here...but what if you have no buying power to exercise the option?
true story bro
You can't buy 100 shares if you don't have the money. You have the option to exercise but you need the capital to do so. Plan on selling your option unless you have the capital to exercise
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Wow nicely done! I own lots of LEAPS on Tesla with strikes at $180, $900, $1300, $1600 and $1700. I was thinking of selling off the $180 strikes and buying shares so I could sell covered calls but wow you completely sold me on keeping those $180 strikes. Thank you! Randy
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Disagree: it's riskier owning call options. Invested amount x can be 100% lost with either, but call options yields a 100% loss at anything less than a very specific price or at a very specific time, whereas stocks only result in a total loss if it reaches 0 (extremely unlikely in an index) and even if the stock did reach 0, you have the ability to wait as long as you want to see if the value will go back up, something you don't have with options. Call options can result in a total loss if the price is far above 0 at "near" expiration. Therefore you are wrong.
I like this breakdown. I play LEAPS, although sometimes the bid/ask spread is too wide to be filled, or the option is too expensive. However, I was playing mine closer to ATM because I'm not made of Bitcoins. More downside protection, at the loss of upside for the first few dollar gains.
Omg it's soo deep.
Deep ITM
Deep ITM
Wish I would have found this video 5 years ago - wouldn't have had to figure this all out myself. So good!