Apr 10, 20212 min
Updated: May 28, 2021
Hey everyone!
If you followed our LEAPS recommendation for MSFT last month, you can consider selling some of them as we are approaching MSFT's earnings date. Remember, we like to purchase LEAPS options when IV is low and sell them when IV is high.
At the time of the recommendation, MSFT was trading at $234.81 and the $200 strike LEAPS option was worth $5620.
MSFT is now currently trading at $255.75 and the $200 strike LEAPS option is now worth $6850.
If you sell your LEAPS option now, you can profit around $1230, which is around a 22% ROI. Pretty nice!
Remember that when you sell your LEAPS option, you want to choose "sell to close," since you are selling your LEAPS option to close your position.
Here is a snapshot of the current option chain for MSFT for the January 20, 2023 expiration date.
The $200 strike LEAPS option was a delta 0.70 when we first entered. However, notice that the delta increased to 0.77. Why is that? It's because of gamma! When a stock increases in price, it will cause delta, or the "speed of the car," to increase exponentially.
If you have any AAPL LEAPS options, like as I do, you may have some in the red. However, I wouldn't worry too much since I see AAPL rising in the next couple of months. Because our expiration date is in January 2023, we still have a lot of time to be correct about the direction of the stock.
So is now a good time to purchase LEAPS options? Eh, I would actually wait. We are entering earnings, which may be a volatile time. I would be more on the conservative side and wait until after earnings to see how well these companies did. Once we see who the winners and "good students" are, we can then start buying some more LEAPS.
Stay disciplined! 😎
-Steve and the Call to Leap Team
The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.