Hey Advanced Traders!
Let's cycle some of LEAPS this week!
Like what I mentioned two weeks ago, stocks like MSFT, AAPL, COST, HD, and LOW are doing
well in this current environment. If your LEAPS options are green and increased in delta, you can consider selling them for a profit and purchasing a new LEAPS at around the same initial delta 0.65 or above.
If you have a profitable LEAPS option that you are planning to hold until the next quarter, you can also consider buying another LEAPS option to trade. The purpose of this second LEAPS option is to "play hot potato." You probably have noticed by now that LEAPS option values move quickly up and down. Your goal for this second LEAPS option is to sell it whenever you have a 5-10% increase.
The LEAPS options that I recommend purchasing right now should have a delta that is greater than a 0.65 with an expiration date somewhere in mid 2023 or early 2024. I would not buy any LEAPS that are further OTM or earlier in expiration since theta decay can rapidly increase.
Please also remember to fund your LEAPS options with the premiums you made from your Wheels and not just from your own capital. You want to use the money that you pulled from the market and reinvest it into these LEAPS so you reduce your risk.
Lastly, do not overweight your portfolio in LEAPS options as they are magnified derivatives! I would recommend to keep your LEAPS allocation under 10% in case we experience another major pullback.
Stay patient and 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.
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