Premium Membership Positions - January 9, 2021
- Call to Leap
- Jan 10, 2021
- 2 min read
Updated: Mar 13, 2021
Hey Investors and Traders!
Selling AAPL LEAPs
For those of you who purchased a Delta 0.80 LEAPs option back in December, you can consider closing your position by selling your option. If you purchased the Delta 0.80 LEAPs option for around $5000, you can now sell it for around a $300-400 profit, or a 6-8% profit in about 3 weeks. Pretty nice huh? 💰
Here is a snapshot of the charts before and after:
December 21, 2020:
Stock: AAPL
Expiration Date: 2023-01-20
Type: Call
Delta: 80
Strike: $85
Investment: $5000
January 10, 2021:
Stock: AAPL
Expiration Date: 2023-01-20
Type: Call
Delta: 80
Strike: $85
Investment: $5335
Because we are nearing Apple's earnings date on January 27, implied volatility is increasing, meaning that if all variables stay the same, the value of Apple's LEAPs options will theoretically increase.
Why do option values increase? Remember that an option value is made up of two factors, (1) intrinsic and (2) extrinsic value. The extrinsic value is mostly determined by (1) time and (2) implied volatility. As we near a stock's earnings date, the extrinsic portion of an option will "inflate," causing the entire option value to increase. This is typically a good time to sell options at a higher price to option "gamblers" who want to take partake in the risk of the stock's massive move after an earnings announcement.
If you want to start a position in LEAPs options, we recommend to wait until after earnings, when implied volatility is lower and options are more at a "discount."
If you want to have more in-depth conversations about these advanced derivatives 🤓, feel free to chat with others in our Discord, or ask us questions in our Level 2 page.
Stay amazing! 😎
- 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.
