#OptionsTrading #LEAPS #TeslaLeaps #ILMN #LEAPSTrading #OptionStrategies
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TIMESTAMPS:
0:00 Introduction
0:30 LEAPS
0:40 Disclaimer and 1.2 Million Views
1:00 LEAPS Advantages Time Stability Leverage Great returns (when you back a winner!)
1:35 LEAPS Defined LEAPS are publicly traded options contracts with expiration dates more 1 year and out, up to 3 years from issue Identical to other options, except with longer times until expiration. Typically traded on stable well traded stocks, ETFs and indexes
2:35 LEAPS Defined
3:00 Short Term Calls vs Leaps Think of rent per month - ie time value. Short-term calls are like renting 5-star hotel rooms at $1000 a night. LEAPS are like buying a house and paying 2.5% mtg interest ie borrow $500K
4:15 LEAP Math My $TSLA LEAP Buy - story of the X! 9,000% return
7:00 Terminology:ATM, ITM, OTM A call option is in the money (ITM) if the market price is above the strike price. A put option is in the money if the market price is below the strike price. An option can also be out of the money (OTM) or at the money (ATM).
8:00 The Greeks Sensitivity of option’s price to changes in the value of underlying security - Delta Rate of time decay of an option - Theta Rate of change of Delta relative to change of price of underlying security - Gamma Option’s sensitivity volatility -ie Vega Vix Sensitive the price of the option is relative to interest rates - Rho
8:24 ILMN Play - bought the $300 LEAPS for $90. BEP $390 Now DELTA is $87 per $ move in price Buy in the money leaps DELTA Secret on Patreon Theta is the loss per day in $ of Time Decay
9:35 LEAPS Rules and What to Watch For
10:00 When to Buy? If you are thinking about buying LEAPS, you may want to do so when implied volatility is relatively low - Vega. Sell when Vega is high Note Rho (an options' sensitivity to a change in interest rates) is no longer important!
10:40 Long Term Outlook Takeaways: Needs to be bullish Find the bottoms Identify the range
11:30 Make a Thesis eg $1T MktCap
11:50 Risk Stock options are always RISKY if you do not know what you are doing. You can structure your investment with LEAPS if you're bullish on a particular stock. A rise of 50% could translate into a 300% gain, but this strategy comes with risks and the odds are stacked against you - you against the machine. Remember the rules I shared!
12:30 Watch Open Interest Need volume to trade.
13:00 Limit Orders Only - Sometimes LEAPS can have big spread between bid and ask.
14:00 Taxes When LEAPs are sold at a profit, the gain is taxable.
15:00 How I Operate
16:00 ILMN Simple Math Remember the Delta is key Time decay is gradual
17:00 Time Decay
18:00 Patreon.com / InvestAnswers see how I trade