Hi Wealth Builders! 👋
The markets had a great week with the Dow, S&P500, and Nasdaq advancing 2.0%, 2.3%, and 2.2% respectively.
Steve's Trades
For those who have been following along this month, just wanted to remind you all of our LEAPS guidelines below (Note: You can review these guidelines in detail in our Call to Leap Level 3 training):
Fund your LEAPS using your Wheel premiums
Higher Delta = More Safety (LEAPS have higher intrinsic to extrinsic value ratio)
Position size so you don't exceed 10% of your portfolio in LEAPS options.
If you buy the LEAPS, then you will have the following choices:
Automatically sell the LEAPS at a $250-300 profit
Sell the LEAPS 1 week before any of the upcoming earnings releases prior to your LEAPS expiration given you've hit your profit targets
*We sell right before earnings because implied volatility is highest, so we sell the contract at a higher price.
Also, I wanted to call special attention to Rule #3. This means that if any of you have started a LEAPS position in our recent weekly articles, be patient to cycle your LEAPS (i.e., sell your existing LEAPS at a profit later before starting a new one). LEAPS work well in a rising market but can also be extremely risky should the market turn in any moment if they are a significant part of your portfolio. Instead, consider a Cash Secured Put in lieu of LEAPS if you already have an existing LEAPS. Down the road when we cycle your LEAPS, remember to invest your profits in long term holds (e.g., VOO, SPY, certain stocks) so the profits that you've banked are still working for you!
Finally, if you have heavy concentration in any one company (e.g., someone is heavily concentrated in AMZN if they hold AMZN LEAPS and AMZN Cash Secured Puts...and lots of AMZN stock), consider spreading your exposure to different companies (e.g., the concentrated AMZN holder can start APPL positions instead of another AMZN position).
It's exciting to be amidst the current bullish sentiment but remember to be patient, do your homework, keep an eye on risk, and build wealth slowly!
AMZN Trades
AMZN LEAPS
This week I'm looking at AMZN LEAPS that are 365+ days out with around ~0.70 delta for moderate risk and around ~0.80 delta for lower risk. Lower risk: Buy 1 January 17, 2025, Delta ~0.82, $90 strike LEAPS for $5,205.
Moderate risk: Buy 1 January 17, 2025, Delta ~0.60, $130 strike LEAPS for $2,645.
AMZN Cash Secured Put
Expiration Date: August 11, 2023
Step 1: Have $12,000 of cash as collateral
Step 2: Sell 1 $120 strike put option (delta -0.23) for $203
Credit/premium received: $203
AAPL Trades
AAPL LEAPS
Similar to above, I'm looking at AAPL LEAPS that are 365+ days out with around ~0.70 delta for moderate risk and around ~0.80 delta for lower risk. Lower risk: Buy 1 December 20, 2024, Delta ~0.83, $135 strike LEAPS for $7,205.
Moderate risk: Buy 1 December 20, 2024, Delta ~0.60, $190 strike LEAPS for $3,270.
AAPL Cash Secured Put
Expiration Date: August 11, 2023
Step 1: Have $18,500 of cash as collateral
Step 2: Sell 1 $185 strike put option (delta -0.25) for $217
Credit/premium received: $217
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Have a wonderful weekend! 🙂
-Steve and the Call to Leap Team
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