LEAPS Options Guide For Beginners | Why Are LEAPS So Good
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- Опубліковано 30 лип 2024
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0:00 - Intro
0:38 - What are LEAPS
2:17 - Intrinsic extrinsic value
4:51 - Different scenario of trading LEAPS
8:02 - Downside of trading LEAPS
10:20 - Rules for using LEAPS
None of this is meant to be construed as investment advice. It's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites.
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Hi kevin, im an options trader. Yes what you mention is all correct. One can reduce cash outlay and hence achieve leverage through options. Also when buying calls, downside is limited, which is often neglected. But when it gets ugly it saves you.
However, options take into account the dividends expected to be paid during the tenor hence reducing the fwds and the intrinsic/extrinsic value. So you may think its cheap, but do note, as a leaps holder you dont receive dividends. But as a shareholder, you do.
Interesting and educational video. An follow-up video on selling LEAPS on stocks you already own (covered calls) may be interesting too.
Selling LEAPS is not that good because the decay is extremely slow. A normal covered call with 30-45 dte is better imo
Good introduction to LEAPS. To further enhance the option strategy, you can try doing Poor man’s covered call to do short term SC to earn additional premium. Downside will be limiting your profit if the stocks suddenly sky rocket. 👍🏻
Just a question on what will you do if the stock reaches higher than your sc and otherwise in PMCC? close both leaps and sell call to get profit?
I think Leaps are used more commonly with selling covered calls aka Poor Man's Covered Call (PMCC) to generate income to offset the premium paid. This reduces the risks over time but might be too complicated for some to execute. Maybe another video to explain this PMCC would be interesting.
wah chim.. my tiny brain still stuck at covered calls and cash secured puts only. Hope you can employ this strategy into your investing and keep us updated on how its doing.
Hi Kevin, have you try selling puts (cash covered) with very low delta (i.e. far far out of money)for LEAPS?
Very clear explanation
I hope you have read the Jason Cai's blog before commenting that leaps' risk is lower... When the market decides to turn against you down the road, time decay will go against you... I hope everyone will do their due diligence, relook into their personal portfolio allocation, reassess their own risk profile before doing anything. Anyway, good luck 🤞
See around 11:00 where I explain why Jason Cai lost money
Leaps are better when market has been down for sometime. In an all time high market be careful
Hi Kelvin, for ibkr I'm trying to edit the trading permission to include option trading but no matter how I update my profile it keeps saying I'm not allowed to use options. Do you have any idea why?
They don't want you to know the infinite money hack
Thanks for sharing as always, Kevin. How about selling LEAPS option?
I don't like it for few reasons.
1. Time decay is very slow at the start. Better to sell 30-45 days to expiry options where decay speeds up
2. Locking up money for 1-2 years for minimal income. Better to invest the money
@Kelvin Learns Investing Yes that makes sense, but we can also close the options earlier too once we have profited, say like 50% too right?
@@sswsa3980 The extrinsic value is around 5-15% of option value. For the option to profit 50%, you need the stock go up/down 40-50%. Is that possible? Yes. But not so probable.
@Kelvin Learns Investing I understand where you're coming from. I've done a LEAPS trade on AAPL. I sold way OTM Put option ($100) on 8th Mar 2022 with a premium of $3.15 & expiration 20 Jan 2023. AAPL was $158 at that time. I can't remember the exact date I closed it, but I paid $135 to buy to close. My profit was 57.14% 😉. But obviously we need to choose a good stock and have to be sure that the price will go up.
@@sswsa3980
Amateurs think about profit only.
Pros think risk control.
Wat makes u think u can profit 50% off the bat.
what is the website used in 11:00?
www.optionsprofitcalculator.com/calculator/long-call.html
I have around 80k worth of share and 1k cash in my moomoo acc. I have started to sell put and sell call also. Now when I try to buy new share, acc prompted me that I need to use margin. I am a bit confused as I did have some cash inside. Can help to explain on this matter?
Check if u have converted to Usd or not
Options are worthless, LEAPS are stupid (I help you comment) hehe
If u sell leap is different case they are worth to u
@@bloggeraldwin selling leaps are the worst
So at 2:52 you're saying one could buy that call option at 79.52, exercise it on that day and sell the assigned stocks at market price for an almost instant profit? Why don't one just do that and repeat it every few days then. Honest question.
Because I'm paying extra $4.50 to buy the stock at $50. No one wants to pay extra 10% to buy the stock
Oh right. Forgot still need to buy the underlying at 50$ when exercising. Thanks.
Confused. 100 stocks or 100 shares? If 100 stocks, what's the stock list.
Its both. 1 option contract = 100 stocks/shares
@Kelvin Learns Investing my understanding. Stock is the name ex. $AAPL, shares is the unit number you want to buy. I thought 100 stocks were not the same as 100 shares of a stock.
what about scenario of apple stock dropping 50% and then increase 50% ??
i really can see what bs this channel is driving into....
U try laying out the scenario for us
Did you offload some tesla kelvin? Lol… it’s up 40% this past month
Diamond hand
@@KelvinLearnsInvesting hahaha especially after today
My takeaway is Kevin is a rich boi boi. Can afford leaps while keeping it at only 5-10% of his portfolio :/
Kelvin, with 85k subscribers, you need to be more sensitive to the potential impacts of what you preach. There will be several people who will get into LEAPs once you promote it. From watching your past videos, I do believe I know your “investing personality’’ … my bet is you WILL NOT personally pay about $8k to buy a 2-year APPL Call at $50 strike price. Please promote only investing ideas that you truly believe are great. Simply including the cons of LEAPs in your video does NOT absolve you from all responsibilities when your viewers suffer significant losses from executing what you promote in your videos.
I do intend to use LEAPS in my investing strategy. That's why I'm looking into it in the first place
There is a sucker born every minute. If not by listening to kelvin then listening to others. In investing also there is nothing call "responsible investing" investing is risky in the first place.
The riskiest technique u think is "safe n sound" ones
@@KelvinLearnsInvesting Hi Kelvin, it has been over a year now. Have you turned your “intention” into real action? Having learned what you learned in the past one year, do you still believe LEAPS is not that risky and would still recommend your viewers get into 2-year LEAPS?
And if you do the Math … how can paying $450 to reduce a capital outlay by $4,500 (from $12,500 to about $8,000 in your example) for 2 years be worth it financially speaking …
Its a risk you have to take. But like i explained in the video, if i saved $8k over 2 years, i can put it in tbills or cpf to earn 4% interest, over 2 years that’s 8% interest, or $360. That would cover a big part of the premiums paid.
Should be 100 share and not 100 stock