With that, I don't guarantee the accuracy of any of what I've said because I generally don't buy LEAPs.LEAP Into Your Future. I don't like earnings reports so holding a LEAPs contract is generally out of my trading style, personally. I sometimes sell them as part of a boring dividend capture strategy for part pig my portfolio. Honest advice, practice with covered calls because they're similar trades with a lot less complexity-just more capital use and fewer Greeks to net out. Learn how you plan to roll and what you're mechanics are, plan your trade.
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Never lock in a loss on open-keep your short strike greater than long strike + extrinsic value on the purchased option. Long leg, low volatility short legs, higher relative volatility. You don't want to be paying for near term risk while also carrying it-that's not a good idea. If there's any realistic extrinsic value left you probably want to avoid the final month to as much as the final three months and roll into a longer dated position with the extrinsic value.Ī period of low volatility, usually. If there's almost no extrinsic value left (deep ITM or hopelessly OTM) it probably doesn't matter. No answer but is dependent upon where you are as you're approaching the final 90-days in the contract. More a question of what should you avoid than what should you buy? And when do you roll your position? Better question is what do you want your risk/reward profile to look like on a long option? But I also tried shorting TSLA, and quit right about the time it dropped. I bought AAPL leaps way back when it was in the low 100's. I've actually made more this year buying which is weird for me but it's mostly because of the Trump bump. I do it because selling premium is pretty boring and I like to put my assumptions to the test (and I don't really do it in a big way like I do with selling). Someone else will have to help you here.įinally, what is your strategy for buying LEAP call options (any cool stories to share)?īuying premium isn't usually a great idea. I was playing NVDA and tried to buy when vol dipped.ħ) If I decide to do a Poor Man's covered call, what should be the general rules of thumb? I do check recent vol for an entry point. The Delta I guess but still it's not nearly as exacting. Honestly, for buying premium I don't use that at all. I mostly sell premium and I use the greeks there. If you're buying calls then you want a bull market.Ħ) What are the most important greeks to look at & how should I keep track of them (when to enter/exit?) close to earnings, macroeconomic news release. There's no math here that I've found useful.ĥ) In what market condition should I buy it? (i.e. Is it hitting new highs? Are you buying only one option? Here's an example of what I do: Awhile back I bought 7 AMD Sept options at the 13 strike. This is an impossible question to answer.
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In short, it really depends on the stock you're buying.Ĥ) How many Days to Expiration, optimally, would be the last day to sell the options? If you think TSLA will hit 400 by December then that would around the time horizon I'd search for. It really depends on what your assumption are about the stock. ITM delta moves will give you a higher dollar returnģ) How many Days to Expiration would be the sweetspot for buying options? OTM delta moves will give you a higher percent return Like when aapl dropped to 143.Ģ) Is there a difference in profitability if I buy OTM/ITM?
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I'll go out further (lower) if it's a dip I disagree with.
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What is the strike I should be looking at?ĭepends on the stock but in general the 70 or 80 delta.