Make $250 with LEAPS Options | Beginner's Guide to LEAPS Call Options
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- Опубликовано: 16 дек 2020
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Definitely knocked it out the park with this one.
Appreciate it!
I appreciate these types of videos! I’m a beginner and I love watching videos and learning something new every day before I just “yolo” it!
Great to hear, Mason!
To celebrate our Level II LEAPs program launch, we're gonna give all new members free access to the Level II program if they sign up as a standard member before this Friday. 12/18. Check it out on calltoleap.com!
When you buy option on Friday the option decay even faster like by minutes. I wonder why?
Can I sign up for the rate in the video please!!!!
Best video on leaps I have seen thus far!
I appreciate it Simone! Glad it was helpful for you
Great info and tutorial!
One of the best explanation I’ve seen!! New sub for sure.
appreciate it!
This video is gold, thank you!!!
Thank you so much!! I have been earning with options but I have had avoidable losses as well. You explained Greeks in a way that allowed me to understand why i earned and why i lost. This is the best free information i have had in a long time.... Thank you!!
Glad it helped! :)
Hey Steve can you please make a tutorial video on how to sell weekly or monthly covered calls to collect premimum against a LEAPS that you ALREADY own? All i find online is people selling long diagonals or calender spreads. I cant find anywhere where u can sell covered call against a leaps u already own or selling more calls after a previous call u sold expires (against the leap u own). Can you make a video showing how to do it on TOS? Thank you for always teaching us useful stuff, investing and not gambling
Thank you for simplifying LEAPS for us numerically-challenged folk!
Haha! No problem!
Nice info on LEAP’s options man. Have a great trading week and New Years
Thanks! You too!
Fun Fact. It’s LEAPS. “Long Term Equity AnticiPation Securities”. The “S” is part of the acronym and does not make it plural.
Best options video on YT
thank you Chris! That's very nice of you to say
Thank you Steve!
Of course! Glad to share
Wow! now i understand the Theta and Delta. Thank you very much!!!
Glad it helped!
Super well explained video!!! Thanks a ton!!
Glad it was helpful!
just started with LEAPS, been using the wheel strategy selling call/put options. thank you for easily explaining the Greeks
I'm glad it's working for you Rich!
Awsome video.Keep it up
Thanks for watching! Glad to share
passive income goals! I found you after following you on TikTok!
Awesome! Thank you!
Great 👍👍👍👏👏👏
You remind me of my teachers😂even the way you talk. Love it
I was actually a public school teacher for 7 years! That's probably why 😂
Found you off TikTok new subscriber
Woohoo 🎉
What's an implied volatility % one should shoot for when purchasing 1 1/2 - 2 year leaps
Would be good to see what the potential losses are for this. EG, if you buy a LEAP with a strike of $80. The current stock price is $100, what would the loss be if the option expired and the stock price was $90?
You give good advise like only invest with options with small portion of your portfolio good advice
thank you thank you Great
You are welcome!
You can lose a lot of money on LEAPS even if you do know what you are doing ! Leveraged derivatives carry risk, both up, and down. IV crush can be a killer from which there may be no recovery. Your comment on keeping the portfolio amount lower is spot on ! LEAPS are kind of a synthetic stock with more potential upside than the stock but a larger risk of loss as well. This is a solid and informative video, nice job !
This!
I think you are oversimplifying things. In a way, buying a LEAPS option can be LESS risky than buying stocks. For example, let's say you buy 100 shares of AAPL at $139/share, you will spend $13,900. You may be able to buy a 12 month LEAPS option for $5,000. If AAPL stock [ for a strange reason] crashes to $0/share, you have a loss (unrealized) of $13,900. If you bought a LEAPS option, your total loss would be the $5,000 you paid for the option. You will live to fight another day!
@@yawboateng8188 thats why i dont buy leaps unless its an index fund. I never buy individual stock leaps
Great video
Thanks Robert!
I liked it explanation
Thank you!
What a great video!!! And your course is very affordable!!! I wish I found this earlier!!
Thanks DeAnna! Means a lot to me!
Mate your videos look amazing!!! what tool do you use for them??
Thanks! I use Adobe Premiere. My trading platform is TOS, Think or Swim.
as of today 1/22/2021 the AAPL option is worth 2,900. Great video showing profit the longer it goes lol.
appreciate it! Glad the video was helpful!
F
Love your content and a new subscriber. Quick question what’s your favorite go to options strategy that gives the most profitable and consistent results?
I like to sell short term options and buy long term options. My favorite strategy is the Wheel Strategy, which is the combination of selling covered calls and cash secured puts.
leaps are gonna make me rich~!
In performing LEAPS, does the underlying price have to be above your Strike price in order to be profitable? And when do you know when to exit the position?
No, not necessarily. If the underlying stock moves up rapidly, for say around $10 within a month, I would typically sell it for a profit. If I have a delta 0.80 LEAPS option, it would gain around $800 in value.
Awesome 👍👍😎😎👏👏
Good job 👍
Thanks 👍
Can you do a video explaining all the greeks
Soon! Did one on delta recently
thank you for the great video, it was very clear for an amateur like me. but
1) what if the price of the stock drops?
2) can and do we sell the LEAPS and suffer only theta decay as losses?
3) if at D50 we make $50 for every $1 increase, do we also lose $50 for every $1 decrease?
truly appreciated
If the underlying drops, the LEAPS will also drop quickly. If you hold onto the LEAPS for a period of time even with the underlying not moving, the LEAPS will still slowly decay from theta.
Why not ITM at 105 Calls? e.g. at Delta 0.72. And when should we close the option trade?
Awesome video man , how much would you need in investments to start with options trading?
Around 10k to start with level 1 trades like selling covered calls and csp. Check out my other tutorials on them if you’re interested👍🏻
大変良かった致しました👍👍👍👏👏💯
10:43 how accurate is that?
Pls give some references to docs...as in what’s the gain for the leaps call writer?
Since we are keeping all variables the same (gamma, theta, IV, etc), the LEAPS moves $50 for every $1 move up of the underlying stock.
Are buying leap options a good alternative to buying a stock if you love company and wouldn’t mind owning. Ty for the video
It can be. However, remember that options are derivatives and not stocks, meaning their values can still go to zero
11:00 wait, dont we need to take into account the premium paid?
Should I buy in the money or out of the money le
I never hear anyone say what happens if a leap expires? If your leap is above your strike price you bought it at at expiration say you forgot about a 1 year leap you had open will you get a profit will the broker sell it at current price for profit or will they just take all your money you paid to open it?
Normally a leap call option on a stock like Tesla would still be expensive like $20k, but what happens if you do a call debit spread. Pay around $350 and then once it get filled you buy back the sell leg portion leaving just the call part open wouldn't that mean you just technically bought a leap option for significantly less amount ?
By buying back the other leg it would cost the difference and resolve it back to about 20k committed cash
Very good explanation... but why not to buy ITM? Like 60% cost of the current price of xyz stock?
Extrinsic value
I’m really interested into becoming a member I just don’t know if I should now or when I have more money for investments
Totally up to you! You could see if as an investment and start paper trading to understand the mechanics! Hope this video was helpful
Great Video. If your equity moves up very fast in 30-60 days for example. Would it make sense to sell your leap, roll it over, or just continue to hold it?
I would sell my LEAPS for a profit. With the profit, I would buy some long-term holding shares (which don't have any theta decay). By doing this, I am compounding my portfolio since I'm using the difference I earned from the markets to reinvest and add onto my long-term positions (ex. SPY, QQQ, AAPL, etc). With the LEAPS that I sold, it would have most likely increased in delta. If the underlying continues to move up, I would buy another LEAPS with the same initial delta of when I previously entered in, wait for the underlying to move up, sell the LEAPS with a higher delta for a profit, and continue on the process again. And just to be clear, this is what I would do in a bullish market.
What if you buy an In The Money LEAPs with a higher delta? more expensive .. but safer? Thank you for this video.
Yep.
Great video. I finally understand how to read this stuff and what to do via paper trades.
Glad it was helpful!
What is your average risk in % ?
Do you have a book that we can study to help us figure all this out?
I have a website! You can also read The Options Playbook.
I bought my first leap a month ago. 6 month put to be exact. Got the direction right and I would call it a successful short. Shortly after I bought the stock price dropped 20 percent. At the time it was a ITM put I purchased with some open interest. Even though I'm technically im in the money extrinsicly. I don't know why but the strike I selected currently has a wide bid ask spread and I'm worried that I won't be able to sell my contract back out at a good price due to wide bid ask slippage. Any tips on how to close it appropriately to collect more profit? Ive been trying to see what I can do. Some people suggested if I can't get a good price I should just let my broker excise . I have 12 contracts so I know it may get pricey to close out.. any suggestions? If I sell near the bid I'm expecting to make 8k while if I get a better fill it would be closer to a 14k profit.
Fun Fact. It’s LEAPS. “Long Term Equity AnticiPation Securities”. The “S” is part of the acronym and does not make it plural.
Excellent video. Great explaination. I'd love to see you do a video on sell strategies for LEAPS. When to sell and take profits, maybe go through the process of how to sell.
Great question! I like to sell my LEAPs option when it rises around $400-600. When I sell the LEAPS option, I would then go in with another delta 0.80 option, which would now theoretically be different than my previous delta 0.80 option. I call this "cycling" my LEAPs options.
Q? Can you sell a leaps (buy call) when not above the break even? For example, I bought a leaps 1 year out, paid 1.43 Sold for 1.77. Appears to have made 34$. But was not above break even which was 22.23, stock price was at 19.51. Thank you 🙏
You can sell your LEAPS whenever you want, regardless if you initially purchase it below or above the breakeven price. Just keep in mind that as time progresses, the value of your LEAPS will decay by theta, meaning that it might be optimal to sell your LEAPS before it has less than 365 days until expiration.
Is it better to be ITM or deep ITM?
It depends
Why is the “s” lower case?
I see you fixed it! Good stuff
Thanks!
Do you let them expire or sell them before they expire... And how do you know the value?
You always want to sell or close before expiration date. Because if you are in the money after expiration date, you will be exercised. By that you are accepting or purchasing those shares. That’s why they always say always be closing.
Would this Leaps call strategy work in a bear market?
Buying a call leap option in a bear market will be really good so long as the bear market ends before your call option expires. On average the market returns 9.2% per year over the past 10 years so it would be unwise to hold put leaps unless you are holding them for the short term.
How can one find Leaps that are traded?Reason I am asking is becausue not all stocks have LEAPS.Thanks!
You are right. Not all stocks have LEAPS. In fact, not all stocks have options, either. I suggest you pick stocks you want to buy a LEAPS option on. Then go to your broker's platform and try to purchase the LEAPS (you have to specify that you want to buy an option). There is no special place to buy LEAPS as it is the EXPIRATION date that determines if it a LEAPS option or ordinary option.
General principles for when to sell a LEAP? Presumably before THETA accelerates in the last 100 days but for LEAPS ~ 2 years in time, what would you recommend?
I would play it on the safe side an purchase around 1.5 years out. I don't mind spending more money on something that is higher quality.
@@CalltoLeap right but how about when you sell the leap? Or do you hold your leaps to maturity?
Any reason why you wouldn’t turn a leap into a leap spread to reduce your cost basis?
Fun Fact. It’s LEAPS. “Long Term Equity AnticiPation Securities”. The “S” is part of the acronym and does not make it plural.
LEAP is buying long termed call option? safer but more expensive?
Correct. It's a relatively safer alternative than buying shorter-dated options.
Can you collect dividends and call options at the same time?
Yes! If you own the 100 shares during before the ex div day, you also receive the dividends.
@@CalltoLeap I gotta say thanks to you. I feel like I have a direction in life. I'm ready to take your course even if I have to pay for it. Because knowledge is forever.
Hey Matt, just to clarify. If you BUY a LEAPS option on a stock (AAPL for instance), you DON'T get dividends. You are essentially "renting" the stock by controlling it. The owner of the shares collects the dividend. If you SELL a covered call, you collect the dividend as well as the call premium because you OWN the shares until/unless they are called away /exercised. I hope this helps.
Have you considered selling calls against you leaps?
Absolutely! This is called a modified calendar spread or a Poor Man's covered call. I usually like to do this when my underlying stocks start to trend neutrally. What about you?
Can leaps be traded in a small account?
I don't recommend it. I would focus more on investing for the long-term and buying assets that do not have theta decay.
@@CalltoLeap Thank you. I started using them for PMCC's
what happens if I sell a call option against my LEAPs contract and the call option gets exercised? Will my LEAPs contract automatically buy the 100 shares and then trade it over?
i think the only time u can sell a call is if u own 100 shares, and if thats true and it exercises, ur 100 shares are sold, then i dont think this affects ur LEAP Call.
Clever CAT The reason I ask is because Robinhood allows users to sell a call against your LEAP. So basically, users can sell a call without owning the 100 shares of the underlying stock. The LEAP contract becomes the collateral.
@@ashrafchowdhury9620 lookup PMCC or poor mans covered call. That is what you’re explaining.
Can you sell covered calls against your call?
Yes! This would be some sort of diagonal or calendar spread.
Is this considered as Buy to Open?
yes, when you start your position.
Yep! This is when you start your position
Can you do a video on how to exit leaps. Im in a leap right now. Bought the 45 call on Redfin and its at 73 now but expires Jan 2022. Not sure if I should keep it another year, or if I can exit early. And how to property exit it. I bought it on robinhood.
If you bought a call, you will sell too close
You would sell to close. I typically would sell a couple of days before earnings so you sell into high IV
If you encounter trouble buying to close due to ITM options low liquidity remember that you can always exercise the option to exit the position. You would then be sacrificing extrinsic or time value but you would make a nice profit! To find extrinsic value you simply take the strike price (45) and subtract it from the stock price (73). You take the answer of 28 and then use that to find extrinsic value. 28 is known as what’s called intrinsic value; essentially the amount of money you would make if you were to immediately exercise the option. The rest is extrinsic. Knowing that the intrinsic value of your option is $28 the other value Is extrinsic value and only exists because of the time left to expiration. So if your option is worth say $30 then you have $2 of extrinsic value. Remember that option contracts work in multiples of 100 shares.
The formula for the profit is:
Current stock price - strike price *100
In your example if I am understanding it correctly you would make $2800 if you exercised your call option. By exercising your call option you would receive 100 shares at your strike price of 45 worth $4,500 and then you could immediately sell those 100 shares at the current stock price of $73for $7,300 pocketing the difference of $2800. Holding the position over a year will allow you to pay long term capital gains tax instead of short term higher taxes. Let me know what the outcome is. I wish you the best of luck in the future!
hey! Can you make a video on investing for a Muslim because we are not allowed to be involved in banking interest? I know it sounds weird, but it will really help people out!
Oh man! I need to look this up!
@@CalltoLeap Eyy! Thank you very much for even considering. You're a legend!
@Ron Gosling What? That's not true. profit is permissible as long as the nature of the trade is permissible. Regarding the declaration of profit, a seller has a choice to inform the buyer of the original price of the goods or not. In Islam, it is permissible to do business and invest i companies as you become an owner of the company. I do agree, however, if the nature of the business is haram like selling alcohol or gambling would be haram to invest in.
@Ron Gosling I agree, investing in stocks is halal and interest is haram. Although I do have an idea that interest under certain circumstances is halal and I want your opinion. Basically, every year, inflation brings down the value of a currency by 3%. That would mean that if you give or receive money at 3% a year per year, you don't gain nor do you lose.
最高良かった致しましす👍👍👍👏👏💯
Buying leaps at delta 50 will make breakeven price far away from current price, need to move substantially before making profits
Absolutely. I only recommend this during bullish markets. To be more on the conservative end, you can consider buying deeper ITM LEAPS with higher intrinsic value.
Quick question for anyone out there. Would it be better to buy an OTM leap option for a stock you feel bullish on compared to an IMT option? Buying a OTM option with a strikeprice you know the stock will hit so that it increases the delta and you pay less up front? Sorry if this question might not make sense, difficult to word. Thanks!
True! But OTM options have no intrinsic value, meaning that the extrinsic value can be decayed by Theta.
There is typically more risk with purchasing OTM options due to them only being composed of extrinsic value
Now apple is $172 a stock
Woohoo! My LEAPS became very deep ITM when I closed out. :)
@@CalltoLeap do you think apple will keep going up this year. ? Or are they going to sell since it was at AH
7:27 guh moment
:)
I wish people stop using the term extrinsic and intrinsic. it only make things confusing
In the options world, we ought to understand the differences of these terms and their correction to how we can be profitable.
You are way too slow, i am sorry but i cannot listen to the whole video. You waste a lot of time on the basics, people can google things to catch up.