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LEAPS vs Equity Investments
THREAD
THREAD
Side note*#
Because LEAPs have been talked about extensively, this will be brief. It was among the information requested during the last question so to keep those promises, I will begin threads on what you had asked.
Because LEAPs have been talked about extensively, this will be brief. It was among the information requested during the last question so to keep those promises, I will begin threads on what you had asked.
I always ask new investors who know little to nothing about options:
“What if I told you you could acquire the time value of safety similar to an investment but with much higher gains?”
The usual answer is something like:
“Well I would say that you are full of ****”
“What if I told you you could acquire the time value of safety similar to an investment but with much higher gains?”
The usual answer is something like:
“Well I would say that you are full of ****”
This simple dual question & response however is 99/100 what hooks them.
“If I gave you THREE YEARS to make money on a single trade, would that be enough time for you?”
The answer to this is ALWAYS yes. The reason for this is simple:
“If I gave you THREE YEARS to make money on a single trade, would that be enough time for you?”
The answer to this is ALWAYS yes. The reason for this is simple:
If you can’t money on ANY play be it options or stocks in 3 YEARS, wtf are you still doing here?
The point is LEAPs are slept on, if you’re going to invest in $MSFT & expect a 10% return, buying a LEAP in place of OR, to compliment your trade (married puts/covered calls)
The point is LEAPs are slept on, if you’re going to invest in $MSFT & expect a 10% return, buying a LEAP in place of OR, to compliment your trade (married puts/covered calls)
Why be satisfied with 10% if you already put in the time, the effort and the proper analysis to know that your expected profit is 10%.
But what if you could turn that 10% into let’s say 100% (lol minimum)?
You can. This is the power of LEAP options (see other threads as well).
But what if you could turn that 10% into let’s say 100% (lol minimum)?
You can. This is the power of LEAP options (see other threads as well).
Having such a minimal theta effect + all that time is a POWERFUL thing. When it goes up fast, theta begins to work for you and begins adding value to your position simply for being right - when it goes down, it doesn’t get crushed anywhere like weeklies or even bi-monthlies!
Please don’t think this automatically means be greedy. I am in no way saying 10% isn’t enough, it just doesn’t have to be. Consider the bank is lucky to give 2-3% A YEAR, i’d say 10% even in a month is amazing.
The point is you can compliment your existing positions and analyses with a good leap.
Example 1: Buy 1000 shares of $TSLA and realize hey, maybe I went too quickly here - the trend may not be done. Buying a married LEAP Put gives you time to ride out&profit from the downtrend!
Example 1: Buy 1000 shares of $TSLA and realize hey, maybe I went too quickly here - the trend may not be done. Buying a married LEAP Put gives you time to ride out&profit from the downtrend!
Btw* mini educational tangent:
A Married Put is the name given to an options strategy where an investor purchases an at-the-money put option on the same stock they have a LONG position in (common shares NOT Options) to protect against depreciation in the stock's price.
A Married Put is the name given to an options strategy where an investor purchases an at-the-money put option on the same stock they have a LONG position in (common shares NOT Options) to protect against depreciation in the stock's price.
So basically a Married Put =
LONG Common Stock + ATM Put
If you’re wrong about the stock trend and the price continues to decrease, you are hedging your losses withthe put which will increase in value faster because it is an option.
LONG Common Stock + ATM Put
If you’re wrong about the stock trend and the price continues to decrease, you are hedging your losses withthe put which will increase in value faster because it is an option.
Then you can double down when you close the put to have MORE shares at a better price.
