How I Went from $2,000 to $3.9 Million with LEAPS Options (Full Course) transcript

Hey guys, this is going to be a complete guide on LEAP options because back in 2021, I scaled an account from $100,000 to $700,000. And in this video, I want to go through a step-by-step process, what leap options are, how to use them, what are some proper setups, and I'm also going to go through some live examples of LEAP opportunities that I see right now. This is going to be awesome. So, LEAP options are insanely powerful trading instrument. so powerful that again I was able to really scale my portfolio earlier in the days when I was you know I graduated from college I had a job I was making okay money and I had $100,000 which I was working forever on because I had been trading for a few years at that point I was adding money I was trading as much as I could but you know it was pretty hard to get to $100,000 it took me years but then once I hit $100,000 oh boy here's like a compound chart that you can see on the screen it was like this okay and a lot of that was from leap options.

Leap options I have to credit for really changing my life. This is probably the most profitable option strategy that I have personally used in terms of of growth. Okay, so that 700K you can see here is earlier in the days I was doing not that good. I was kind of struggling on my way to $100,000. You can see here how you know this was probably what 2020 this was before 2021. I had like a 50k portfolio and as you can see just not a whole lot of consistency and obviously now I have scaled to seven figures but on my way I really credit this strategy.

This is why I talk about this all the time on on my YouTube channel here and this is actually why I have created a strategy that I call deeps. Okay, doesn't really exist anywhere else. So, I'm probably going to trademark it, but deep specifically is my method of how I use LEAP options, and we'll talk about that soon. But, you know, as they say, with great power comes great responsibility. Or as I like to say, with great profits comes great risk.

So, I want to highlight that this strategy is amazing, but it is a double-edged sword. So, we will have to discuss uh a lot about risk management. Risk management is something I focus on in my one-on-one coaching because it's not really how much money can you make, it's making money and keeping it as well. It's a kind of very very important combination there, right? You can see Floyd Mayweather, you know, they're saying that he's going broke right now.

So, you know, obviously you can make a lot of money, you have to keep it as well. So, leaps can be very risky if you don't know what you're doing. And that's why people say options, you know, they say options are risky and it's because if you do it incorrectly, it's very risky. You know, people when they, you know, learn about options, they think, "Hey, it's day trading or it's gambling." It's really not. It just depends on your stock selection, which we'll talk about, and we'll jump into my portfolio.

I'll show you some of the positions I currently have. I think Meta is going to be a killer. So, you know, I want to respect your time. If you just want my plays, I think Meta is going to be one. Amazon and Netflix. And then I'm going to have another one probably as well. We'll go into deeper detail, but yeah, Netflix sold off like crazy. meta as well. Under 600 I think is a steal. But here's kind of like the casino gambling odds versus day trading.

Um, you know, casino most people lose. Day trading, everyone loses. I I think day trading is a scam. Um, but yeah, it's all about odds, right? So, that's what really matters. And when I trade options, my goal is to put the odds in my favor as much as possible. So yeah, we'll we'll discuss, but if you know what you're doing, which is what I'm going to show you, you can essentially have a lot more limited risk. And depending on how you think about it, right, if you want to own the stock anyways, and you use a LEAP option to replace your shares, I'm going to show you how to optimally replace shares, I would argue that the risk is very low if you want to own or you're going to own the stock anyways and you replace it with the strategy that you know, this option strategy essentially.

So basically, yeah, you can see on screen what I what I think about it. Okay, so enough about me hyping up this strategy. My goal is not to sell you this strategy. It's to give you the information so you can decide for yourself. So I'm going to give you some theory and then also some practical knowledge. Uh, by the way, here's my Goldman Sachs badge. I know that nowadays with AI, anyone can create images, but this was an image of my Goldman Sachs badge back in oh, this is a long time ago.

This is probably eight or nine years at this point. Okay. I was a lot younger. had a better better hairline. Better hairline. But anyways, um I'm going to share a lot of the stuff that I learned. So, I sat next to adviserss who used the exact strategy. A lot of the clients at Goldman Sachs, they're really after wealth preservation. And I know, you know, a lot of people that are watching my channel, you know, they want to build wealth.

A lot of millionaires are not really coming to me. Although I have seven figure portfolios, majority of people are hardworking professionals, engineers, lawyers, business people, employees, corporate job people. and you know they got 30k, 50k, maybe they have six figures. So they want to do what I've done, right? So it's not about preserving wealth, it's about scaling, it's about scaling wealth. So this is what I think um the leap strategy is so good for.

So my mentor turned a large profit on Apple position back in 2018 and he used LEAPS and that's how I got introduced to this strategy. You know, when I was working on Wall Street, to be honest, although I had a job on Wall Street, I didn't have that much experience. I was a lot younger. I was in my 20s and you know it was cool. I had a prestigious job but I didn't really know what I was doing until I put it to work and now I have a wealth of information.

That's why I make YouTube videos because I want to help other people get into the same shoes as me. I mean you could see you know every video I'm you know I'm traveling so my background could change and I'm in different hotels. I'm eating different food going to different places and it's cool because that's freedom. That's what I think a lot of people are after. So my portfolio 4 million from 100,000 to 700,000 I would say built it established my portfolio and then after that I did um other strategies and I discuss them on on this channel but credit spreads was also pretty good which is a strategy for another video but I used some credit spreads.

I traded a lot of Tesla but yeah let's continue on with my presentation. So here's the flip side. Um a LEAP option is leveraged so keep in mind when I show you a LEAP option and I'll jump let me jump into like Meta right now. I'm going to open up Meta. I'm going to show you what I look for and we'll kind of combine theory and the actual trades side by side. Oh, look at that. Meta. When I made this presentation, Meta was like right here at 566.

Now Meta is already coming up [snorts] pretty hot. Oh man, my community's I told my community yesterday. Can you imagine that? I told my community and now we're my members making back all their the coaching fee in a day. Crazy. Because a leap is leveraged. So you you know when the stock's up 3%, a LEAP can be up 9 10%, because it's it's a leveraged vehicle. So we'll we'll go over the mechanics in a in a second, but it's leveraged.

Okay, keep that in mind. So don't risk more than you can lose, of course. Um and I think I already mentioned I'm not a financial adviser. This is just my experience. My uncle Henry 10 years of bicep over tricep experience. I hope you have fun with this because life's about having fun as well and making money. Hope I can help you with both. Um so yeah, leverage cuts both ways. it can be very dangerous if the option does go down.

So, a LEAP option is very simply uh just a call option. Okay, so we're buying a call option, but it's a long-term call option. Um we'll talk about strikes in a moment, but LEAP options give you control of a stock. Okay, so here's a stock owner. You know, if you want to be a stock owner of Meta, you want to buy 100 shares, that's $58,000. That's a lot of money there. Your total account might not be $58,000. And if you have a six-figure account, that would be way too much of your portfolio. way too much.

You can't even diversify properly if you have a 100 shares of Meta unless you have a massive portfolio which I do and still I prefer diversifying as much as I can. So stock owner can be expensive 100 shares of $50 stock 5K that's reasonable but Meta no 58K way too much. But a leap call option it can literally be a fraction of the cost like a very very small fraction of a 100 shares. So I'm going to show you so stick around. this mistake, a mistake that you can make can literally wipe out most people because it looks cheap, but you got to know how to do this stuff.

So, I promise you, if you invest your time and understand this on a deep level, you can run with this. You can literally run with this. And then from there, if you want me to coach you, great. But if you have success with this yourself, hey, Uncle Henry gave you some free free wisdom. Just take it and run, you know, just maybe um I don't know, just send me an email, say, "Thanks, man." That's all. Or just subscribe. Subscribing is really all I all I would like.

But um yeah, so let's start with the big idea. The big idea is a leap isn't speculation. A leap is really stock replacement. That I'm going to say that one more time. Write this down. A leap isn't speculation. It is stock replacement. You already have companies that you believe in. Okay? If you don't, I have a whole list in my Discord community of all the stocks that I follow. Find a stock that you like and a leap lets you get exposure to that stock without having to put up all of that upfront capital.

Like we're going to look at Meta. We don't want to put up $58,000 doesn't make sense. Okay. So, the same upside if the stock runs, we get a lot more upside for less upfront capital. That's the biggest benefit of what a leap option is. It is tying up less capital so you have more efficiency. And of course, as everything in life, nothing is truly free in life. There's always a catch. That catch is that upside needs time to show up.

And the idea here is in one line, the right company, long enough runway, and if your thesis plays out, you end up doing what I did, which was I had a huge thesis on Tesla, and I turned 100K into 700K. Not all of it was Tesla, but Tesla was a significant portion of that. So, this isn't chasing the next move. It's really getting behind the right play and then using LEAP as a tool to just make a bunch of money on a stock going up.

Okay, that's the whole idea. So, it's owning the outcome that you already expect. So, what is a LEAP option? A LEAP option is just a long-term option contract. And I am going to trademark the term deep because the way I want to do it is by basically buying a deep in the money leap. Okay? So, call it DEAP or deep, right? We're going to have some fun with it. But so by definition, an option contract with more than a year until expiration.

But I still consider a uh shorter expiration such as 9 months a leap as well because for me it's not about definitions. I really want to just profit off of a longer term horizon. Okay? So 9 months gives me several earnings quarters. Earnings happens every three months. So you know every time earnings happens, stocks can move a lot and that's why a leap that is, you know, enough time is so beneficial. So, here's a time decay.

Here's one year. Here's uh 6 months. And I kind of drew it here. Kind of funny. 1 month and then one day. Obviously, you can see in the last one day everything's gone boom. Just lose it. You lose all the value on the option. But because, you know, we're not going to be holding a LEAP option at expiration. We don't have this problem. We're not here. We're going to be selling this option right around here before it experiences that massive time decay.

Okay? So, when I buy a one-year leap option, typically, and here's my exit plan, I want the stock to go up and then I exit at the halfway mark. Simple as that. Anyone else that complicates to more is trying to sell you something. They're trying to sell you on a course or on their mentorship or they're like literally they are themselves trying to over complicate it for no reason whatsoever. The simplest way to play a leap, if you watch the rest of the video, great.

If you don't, that's fine, too. I hope I'm going to drop so many more knowledge bombs, but the number one knowledge bomb that I'm going to drop right now on this video is that you don't have to over complicate it all. If you buy a one-year leap, your only goal is that the stock goes up and at the sixmonth mark, you have to manage it. It is time to manage at the six-month mark. Either take profit, roll, or close out if it's not working your favor. >> [laughter] >> Okay, that's literally one of the like biggest golden secrets is before time decay kicks in, do something.

Don't just sit there and wait for the option to start to decay. Here's what I'll show you. Okay, so here's Meta. Okay, I think Meta is going to be like $700 per share in like early 2027. I think just literally one nice momentum run. So, I'm going to show you. I'm going to go for an expiration date. I'm going to go to buy call. I'm going to go for an expiration date that's going to be out a good amount. Okay, let's go for September.

This is actually one year out option. This is a one-year leap option right now. This is going to be crazy. Okay, it's going to be crazy. Why? Because look at the $600 call option. We'll talk about an out- of the money leap. Just a simple idea right now. And then I'll go a little bit more complicated later on. Look, $600 call option. It cost $102. So the break even is 700. There's no money to be made. Correct. Yes. At expiration.

Are we holding until expiration? Absolutely not. Absolutely not. So, in theory, if you hold until expiration, you break even. You spend 100 and it's worth 100. You can see here that it says uh max profit is unlimited. Your max loss is 10,000. So, let me explain a little bit more. So, this max loss is what you pay for the option. Okay? And right now, MET is at 580. The strike price is at 600. So, if it's 600 or below at expiration, you can lose $10,000.

That's your risk. However, that rarely happens to me just because I'm really not holding the option until expiration because again, I showed you kind of the chart up here that you start to lose most of the time decay right here. Okay, let me show you what time decay is, kind of what it means. So, if I expand this option right here, you can see theta. Now, theta is time decay. I'm going to put an arrow right here that points to theta.

Okay, so theta is 05. What does this 15 mean? Well, actually, since each option is 100 shares, if you multiply 0.15 by 100, it just means that this option is losing $15 per day. That's why there's a negative amount here. So, you're losing $15 per day. Now, why is that the case? Well, time is money and everything costs money in this life. So, if you look at theta, you are essentially renting out a 100 shares. That's kind of what this is.

You have a call option and it's losing value every single day from time, okay? because you're kind of renting out a 100 shares, but you don't have to pay 58 grand. You're paying 10 grand. Amazing, right? And you can do this with cheaper stocks as well. But here, 10 grand, way, way better and more capital efficient than 58 grand by a long shot. So that's data. This is a really important metric for you to understand because as the option gets closer and closer to, you know, expiring, this data is only going to jump up.

I can show you a good example of that. So let me actually show you how theta can move like super against you. So let's go to September 18. Okay, if I look at the 600 call option, uh you can see the theta here is 49. This is three times more decay per day than than 15. It's more than three times, right? So you're losing $50 per day here. And keep in mind this premium is also a lot lower. So as a percentage, you're losing a ton of money 17 days out.

And if I go for something that's three days out, it's going to be even more than that. So, let me scroll down here. I don't know why it started me up so high. Let's scroll down here to like 600. Okay, there's so many strikes when you look at short-term expiry here. Theta's, you know, over $100 and this option is worth 284. So, it's losing a third of its value per day. Makes sense because there's only 3 days left. So, this option is going to lose all of its value very soon.

By the way, this is why I prefer option selling, but that's for my other videos. Let's go back here because I just want you to understand what we looked at. So, instead of buying 100 shares, we're renting out a 100 shares via LEAP options. That's what a LEAP option is. It gives you control. So, here you can see control means the same upside if the stock climbs. In fact, it is the same upside in many ways, but it's a little different.

Okay? So, I can explain to you step by step how it's different. Let's go back here to the 917 expiration of 2027 because although the movement can be similar, the behavior is different. Okay, so if Meta goes up by 10 bucks, then this LEAP option would rise about $5.96, right? So that's how it behaves. Okay, it behaves kind of similar in this regard. When the stock goes up, the LEAP option goes up. Now, this movement that it goes up by $5 is actually amazing because it's basically5 or $6 on a 100.

So, as a percentage return, it's big. It's big because you are making more money on the leap option than you are, you know, on the stock as a percentage since you have put up so much less capital upfront. Okay, that is one of the biggest benefits. Okay, so control means same upside if the stock climbs, same direction, right? So it's very very similar to just owning stock. So you essentially have the same leverage as owning 100 shares, but the only difference is 30 or even 20% of the price.

Okay, here we're putting up 100 instead of basically you know 580. So that's like probably less than 20%. So this in terms of capital efficiency is even less than 20%. Amazing, right? So obviously that's kind of what we're looking for, right? We're looking for leverage. We're looking for upside. Now let's talk a little bit about how leaps move with the stock. Um so here we have stock price. If the stock falls 10% I told you there is risk.

A leap will underperform and a leap is like a double-edged sword. So you will lose money on the downside uh a good amount. Right? So if the stock is down 10% the leap can be down 25%. So make sure your stock selection is is accurate. Make sure you know what you're doing on a technical analysis etc. Right? That's that's the benefit of my community. is because learning strategies is cool, but also knowing when to apply the strategy and on what stock is very very important.

Okay? It's like going out to a tennis game with a bat. You're not going to hit the ball. Even if you have the best swinging technique ever, you're using the wrong, you know, instrument essentially, right? So, when the stock is up 10%, flip side, right? The leap can be up a lot more. You can see here how LEAP functions and uh more time is just more potential. That's what I love about LEAPS is you don't have to be correct in the short term.

You just have to be correct over many many months for your thesis to play out. So that's what I really like about it. LEAP options have deep time value. If they're especially uh in the money, then they have low theta as well. So we'll we'll go over that kind of more uh accurate example of what I call deeps. Okay, I really need to coin that term. But uh so wait, before you go into your brokerage and really start trying to buy LEAPS, you still really need to understand that most people are getting LEAPS wrong.

It's because they're buying options that are out of the money. So, you know, that's really not the right way. So, I've helped a lot of students go, you know, really, really grow their portfolios. Of course, getting the same type of kind of growth that I got into 2021, uh is possible with the right stocks and especially with a lot of uh momentum stocks now that are going up. Stocks are going up, you know, triple digits.

So, a leap option could could really really fast track someone that's looking to retire or gain gain financial freedom. So, um there's a careful art to this. Again, risk management is so important because a lot of people can make a ton of money. It's about protecting as well. So, to master it, you need to understand these key three aspects. Delta, okay, delta, which is what makes my strategy unique and different from anyone else on YouTube who even covers leaps.

Not sure if many people do, but if they do, they're definitely not doing it my way because my way is something that I learned personally when I was trading and working for institutional asset managers and entry. Okay, we're going to look at some technical analysis. Theta is the easier one, but still very very important. When you combine these three, these are the three pillars that um you know ideally get you to growth as well as understanding the risk and managing the LEAP strategy properly.

So, most people think they understand this, but if you're still not getting the results that you want, you probably just don't understand the basics. That's it. You just need to know the basics. Like many things in life, you just have to be good at the basics. But what's easy to do is also not easy to do because it's so easy, you don't do it. You forget it or you don't master it and you just think you need more and more.

It's not the case. Again, keeping it simple. Keep it simple and stupid is my motto. Okay? Okay, I work with a lot of busy professionals and they don't have time to make it advanced and the advanced stuff doesn't even work anyways. Okay, so the first is the easiest to understand. Let's get into the pillars. Uh this the first and easiest one out of the three. I would say it's equally easiest data, but here's delta. Okay, we're going to kind of look at uh Apple here a little bit closer.

Okay, so here is the strike prices of Apple. the more in the money you are, okay? So, if Apple's at, you know, 300 or whatever, 310, 320, whatever it is at the time of this video that you're watching, right? The more the option is in the money, the more value it already has. It has value right now, it has value today. If it's in the money, okay, so what do I mean by that? Well, look at Meta. Meta is at 580. So, this $600 have money right now.

Is it in the money? It's not. It's out of the money. It's not over 600. It has no value today intrinsically if you were to exercise right now. Now I don't think anyone should be exercising options. That's different story. But um I typically just trade. I just trade. I get in, I get out and I make my profits. I'm not exercising options. But look, this option at 600 strike price is out of the money. Has no intrinsic value.

All the value right here is just time, volatility, and a whole lot of may, right? Maybe the stock will go up, etc. Right? And the more the options in the money, okay, so we go below 580, it's going to be more valuable. It's going to be more valuable because it already has value. It already has value right now. Okay? And vice versa, an option that's out of the money is going to be cheaper because the chances of the stock getting to that price is lower and lower because it's out of the money.

It's further away. So the further away you go, and I apologize that this is a little confusing because I took a screenshot from Yahoo Finance. this is going down but on Yahoo Finance going down is more out of the money. You see these strike prices are getting higher whereas on this you know brokerage that I'm using um not important which brokerage you use but this one is going up. So hopefully I'm not confusing anyone.

Okay, so let's talk about kind of like my secret sauce. What I call deeps, deep in the money leaps, which is the way I do it as a stock replacement is I'm looking for a delta of 0.75 as my sweet spot. I'm looking for in the money leap option. This is what kind of makes my LEAP strategy so unique and so different is I'm not looking to buy out of the money options. I don't really think that makes sense. It can work out for sure if the stock goes up a lot.

But what if the stock goes up a little bit and I want to take profit in a week or two, right? Because we don't need to hold a LEAP option for that long. I have many LEAP options where for example, let me do some easy math for you. Okay, let's say let's say I have this LEAP option right here at 600, right? Check this out. If Meta goes from 580 to 600, that's a $20 gain, right? That's not that much for the stock to do.

A $20 gain would result in this option going up by $20 times the delta of6. Okay, because that's how delta works. It tells you how much the option will rise in value. So 20 times the delta of6 is $14. So this option would rise by 14. You can kind of do the math right now. A $20 rise on Meta, I'll put up on the screen. Okay, a $20 rise in Meta is just a couple percent this number on screen. But it going up 20 bucks on the stock pushes the option up by $14.

And $14 as a percent I'm going to put up right here I already know is around 14% almost 14% because this option is worth $101. So it's like very very close to 14%. It's like 13.8%. What a huge difference. And if that can happen on Meta and just literally like that can happen in a week. Meta has volatility, okay? Or any other stock. I'm just showing you an example. I actually already have this position, not 600. I have something else.

I have the 540 um which is the strategy that I'm showing you which is deeps. But anyways, this move in the stock just a few percentage makes the LEAP option rise a disproportionately large percentage. I hope that you're seeing right now what's possible with LEAPS. Okay, let's go back here. So 75 delta. Why do I do that? What does that look like? Well, first of all, delta is a Greek letter that option traders use to measure the probability the option will finish in the money.

That's one of the definitions. The other is the one that I just explained, which is when the stock goes up by a dollar. Delta explains how much the option moves in relation to the stock. 0.5 delta means that the option will go up by 50 cents. Okay? So 70 delta means there's a 70% chance of assignment, which doesn't really matter to us because we're not holding until expiration. assignment really doesn't um matter to us too much, but it is important to know for your other option trading strategies that you may use.

So 70% chance or how the option behaves, right? So higher delta will require higher premium and technically that's more risk. However, um the way I view it is let's go here. Let's go down. Let's go down to 540 cuz I have the 540. It's not for September, but I have for a different expiration date that's really far out. I would do 540 myself. That's what I just told my community to do on Monday. And because the stock is up even 1%, we're already up like four or five percent on the day.

But essentially, I'm going for a higher delta that is about.7. And this delta right here is, you know, in my opinion, in my experience, so much better. Although it's more upfront capital, which technically is more risk cuz you're putting up more capital up front. The sensitivity that you get is is greater. So when the stock goes up by a dollar, you get a whole 68 cents on the dollar for the move, right? And because this option is in the money by a good amount, it actually already has in the money value.

So this is already in the money by 40 bucks. So you know, even if the stock does nothing, the time decay is going to be a bit nicer given that this option is already in the money. It already has value to it. So yeah, lower delta is less premium. It might look safer, but it's really not because you can go for very low deltas. I mean, I'll give you an extreme case just so you see that it's not safer. Let's go for like a thousand.

I mean, is this safer? It's a lot less money up front, but the chances are low. Chances are low. Chances are not in your favor. 17% chance that this option will expire in the money. Not good. So, I would not like this because if Meta goes up by 1%. I mean, this option is not really moving that much. It's so out of the money that investors are like, it's not even close. It's not even close. Meta would have to go up a crazy amount for you to really, you know, significant gain.

So that's why lower delta not really not really good. For leaps I like to go for around 75 delta and that's usually my optimal riskto-reward balance. You can go more than 75 delta but then it's also like you're just paying more and more and the benefit that you're getting of replacing shares has already happened that 70 delta effectively. So 75% of your options staying in the money is the 75 delta. All right. I want you to understand what in the money means versus out of the money.

And just because you're in the money doesn't mean that you're automatically going to be profitable. So here is a chart right here. And the most important takeaway, the most important lesson is in the money and out of the money. You can still lose money overall and not be profitable if you are below your cost basis. Okay? So being in the money does not mean that you're profitable. Because if your cost basis is higher, just because you're in the money doesn't mean really anything at all.

So the most important anchor point for trading leap options is understanding the cost basis. To actually make money, you need to know the cost basis is simply what you paid for the option. Your break even is your strike price plus the premium that you paid. So if you buy a $100 strike leap call option for $15, your break even is going to be $115. See this is the strike price $100 premium 15 break even $115. Always make sure to do that.

Never miss whatever you paid for your premium plus your strike price because adding them up makes your break even point. So delta is also not profit. Your cost basis is the price that you pay for the option. The break even is a strike price plus the premium that you paid. And as I just showed you, $100 plus 15 would be your break even point. And in the money does not always mean profitable. If you buy an out- of-the- money option, even if it goes into the money, still does not mean that you are going to be profitable.

The most important and pretty much only thing that matters to you whenever you're buying a LEAP option is whatever you pay. So, let's go back here. I'm going to show you a position right now. I'm going to use Amazon stock. I like Amazon a lot. I think it's a great business and this stock I am very, very bullish on in the future. So, I actually have $79,000 um invested in Amazon. I want to show you right now what can happen to a leap option.

So let's go to buy call and then I'm going to go out for basically one year. Let's go to September 17. And now we can see here. So buy call option. Buy call option September 17th. That's good. So now let's go for out of the money. So for example, let's go for uh 260 right here. Right? So for example, if Amazon goes to 261, right? That would be in the money. But if that happens next year in August, believe me, there's not that much time left on the option and it's really not going to be worth that much because it's in the money by $1.

There's no time left. So, as you can imagine, all this premium that you pay, $41, a lot of this is going to just decay. So, this option is going to be worth a few bucks next August, right? If it's in the money by a dollar, it'll be worth at least a dollar plus some time, but it's probably not even going to be 10 bucks. It's it's probably going to be just a few dollars. So you can see here how it can be in the money and you're still going to lose money, right?

So you can see here how for example at expiration if it's at 264 it's not worth anything. It's actually you have lost money overall. You're going to be in the red. Now if there's some time left this will be you know better but you need a lot of time. Okay that's the whole point of a leap option. There's a lot of time. This chart is just showing you what happens basically at expiration. before expiration time is going to add, you know, value to the option.

So again, a delta of 0 75 means there's a 75% chance of finishing in the money, not a 75% chance of profit. Okay? And I'll show you more examples. Let's move on into the second pillar, which is entry, which is arguably the most important. And I'm going to open up Yahoo Finance right now. And for entry, what we really want to understand is technical analysis. So, some of the stocks that I follow are going to be on the right here that I, you know, regularly discuss in my Discord community.

There we go. While this loads up, you know, Bloom Energy, Oracle, SoFi, Hood, Apple, American Airlines, Nebus, Amazon, Meta, Nvidia, let's look at Nvidia. I think Nvidia is a great long-term stock. So, let's take a look at Nvidia right now, and let's talk about um the second pillar, which is entry. So entry can be the difference honestly between blowing up your account and having the type of results that I was able to achieve back in 2021.

So obviously no one can really predict the market. So I'm not going to try to say, "Hey, I know exactly what's going to happen because I don't I'm not a financial adviser. I can't predict the future or anything like that." But I can definitely put odds in my favor and basically give myself an edge. And that's what's um going to be important whenever you have your entry into a LEAP option. So predict when it is the perfect time to enter a stock right before it goes up is not possible.

But we can use indicators and different techniques which I'm going to show you right now. So let's go into chart. I'm going to show you basically a good time that I would get into a stock. So again on the chart I have here the moving average and the bowlinger band. You can see here how Nvidia has some very interesting behavior. The stock actually ran up like crazy from April or end of March here all the way huge huge rally to over $230 per share by May.

Then it has basically taken a nose dive. So this was overreaction too much upward momentum and steam and had a pullback. You can see what's interesting here is there is a lag. Okay, this 50-day moving average is lagging because it's taking into account the last 50 days. So you can see as the stock goes up, okay, the moving average goes up but not as fast. It is not as reactive because it's an average over 50 days. So it's smoothed out.

Okay, but you can see how it is very valuable to investors because the moving average tells you simply an average. And I think that majority of stocks and just based on pure math alone that stocks are going to be moving around their moving average. So whenever it is pulled up too much it you know it's likely to come down and when it's too low it's likely to come up because you know law of nature mean reversion. Okay mean reversion things come back to whatever is average.

Okay so you can see right now Nvidia is slightly above. So I am not too excited about buying leap options on Nvidia. I was telling my community to buy 200 when it was sub 200. I was begging them. I was literally on my knees guys please buy leap options. Here's what I'm doing. I was purchasing leap options. I just wanted my community to see profit, right? And that was a very good call. Not that Nvidia is up tremendously, but from sub 200 to 217, that's a 10% move in the stock.

And we know right now that leap options are leveraged. So you can see how, you know, my community has done really well since really, you know, August, all of August, cuz this was end of end of July and I was telling them when it was around here. So yeah, probably actually mid July. I let them know. So I'm not too excited about Nvidia. So, we're going to move on into another stock because, you know, do I want to buy leap option above the moving average and towards the higher end of the bowlinger band?

Not really, unless I'm super bullish on the stock. Okay, so let's go to SoFi. Let's look at what's going on with SoFi. Okay, the stock looks like it's down. It's actually trading in a super tight range. It's been amazing for the wheel strategy. I won't discuss that too much, but that's another strategy that I use all the time. U but look at this. Check this out. You can see here how SoFi has moved below the moving average and below the Ballinger band.

This is beautiful. This is like I'm getting hungry. I'm getting hungry for some steak with some nice nice salt on top. I mean, this looks very good. Very good. This is exactly the setup that I want. So, this is the entry setup that to me looks really good under moving average and under bowlinger band. Okay. So, it's really important to pick the right stock and it's important to see the right setup. So leap options is basically a full year of your money riding on one company.

So whenever I'm looking at a stock, it can't just look like this. This is great, but if it's a bad stock that you don't want to own, it's no good. I do want to own SoFi. So this is a very beautiful setup that I'm excited about. But if you get the wrong company, then really no charts going to save you. So before touching Delta, before touching price, or really any of it, you got to ask yourself, is it a good business?

And this is what I spend a lot of my time researching. So whenever I come into my community and I do my live calls, I'm already well researched into the stock that I want to own, why I want to own it, and I look at all these factors. So here's some of my stock selection factors. So I love competitive advantage and moat. This is something that I learned in business school. It's essentially looking if a business is hard to compete with, that's all right.

If a business is easy to compete with, there's low barrier to entry, then the business can be disrupted. I look for pricing power. So, a company that can raise prices and investors are not really going to do anything. I mean, look at um OMIC, right? If Ompic's price went up, people that are on OMIC, you know, they're probably not not going to get off Ompic. If they're getting the benefits, then, you know, doctor prescribed them or whatever or they just want to lose weight, then they're probably going to be on Ompic whether it's goes up by 20, 30, 50% in price, probably they're going to make more money if they raise prices.

Okay? So, earnings growth, you want to make sure the company is growing. Yeah, that's kind of speaks for itself. uh capital intensity. The lower the capital, the better. However, this one's, you know, obviously if you're a more advanced investor like I am and I'm doing my research. While a great business could still have high capital, obviously, right? Some businesses have very high capital, but generally speaking, lower lower capital to basically print money from a company level is is better, right?

So, return on capital is high, cash is significant, right? Apple has Apple and Microsoft have billions and billions of dollars of money in their um bunkers that they can deploy to buy back shares to invest in growth and so much more. Cash so earns significantly more than it consumes. Management is extremely important. I can do an entire video hour on management alone. But you can just take a look and take some notes from this scorecard.

Take a screenshot or yeah simply simply you know learn about my Discord community. I talk about this all the time whenever I'm investing in businesses. So, a good business is really three things. Growing revenue, profitability, and moat, which we pretty much already discussed. Mo, think about it like a castle. This is a funny image right here, but think about it like a castle, okay? Or think about it. What's that island in San Francisco where there's like a prison?

Anyways, if the prisoners try to leave, there's like crocodiles in the water or whatever, right? Think about that as a moat. So, nobody's going to be like coming into the water and like taking over your castle unless they have advanced technology. This is a long time ago. There's crocodiles in the water. You got a wide moat, right? Nobody's going to be taking your castle, okay? Unless they come in with a massive huge army, then sure, they can.

But it's going to take significant effort. That is the key. That's what a mode is. Takes significant effort, capital, time, connections, relationships to disrupt the business and uh become a competitor. Okay? So if you miss one of these things then you're basically guessing and your leap option is also not going to be successful because at the end of the day a leap option benefits when the stock goes up and that's it right so growth is the business actually bigger than last year so that's what I see actually with so far I see a huge mismatch between the business and the stock that's part of the reason I talk about it on YouTube I think it is a tremendous opportunity now you got to know what's cheap and what that actually means so cheap doesn't mean that it's a low stock price you probably know that unless it's your first week or month investing A low stock price doesn't mean anything.

It means a good price compared to three things. Where it's been, what's happening right now, and what the chart is telling you. So, here's basically, you know, history here. So, 52- week high is 5.85. I want you to try to figure this one out yourself. 52- week low is 150 and the current price is 475. Is this a good candidate for a LEAP option? I purposely asked you this question. What's your thoughts? You might be thinking, not really because it's towards the higher end. and you would be correct, but it does depend how fast the business is growing.

This would simply be an analysis of price, but we would need more information. So, basically down about a fifth from the high, the kind of dip a strong stock takes on its way up, that's amazing, right? If it's a strong stock, it takes a dip, great. But if it's a stock that's been going sideways and um maybe it's already up a bit and it was at 400, now it's up at 475, not as attractive, right? Because it has already made the runup.

So you want to see opportunities that are less favored and less liked in the market. So I want to make this video a little bit more efficient and quick. You can read the example on screen that I have. Think for yourself and answer it. This is kind of the second outcome here and you can write to me in the comments below what you think about it if this would be a good leap option to do. And then here's the third one, the technicals.

So three tools, same job. Figure out figure out if the price is stretched or normal. You want to look at moving averages. And we discussed moving average, but I also want to discuss the RSI. So RSI, I want to scroll down here and give you one more technical indicator to look for. So RSI is basically telling you how much a stock is either overbought or oversold based on the relative strength of the volume. You can see here that SoFi is currently at 42.

So despite it being below the moving average and below the Ballinger band, it's actually not very cheap based off of this indicator. Okay, you would want this indicator to be around 30 or below. At 42.95, it's actually, you know, it's not saying that it's time to buy just yet. So, looking at one indicator alone is not going to be a conclusive, you know, deciding factor. You really want to combine multiple things. And my thesis on SoFi stands despite the RSI here.

But typically, RSI can be very helpful in a scorecard. And I have a full scorecard in my community where I basically say, "Hey, here are the multiple factors that I'm looking at and here's how the overall scorecard is uh scoring for lack of better term, right? Bowling your bands we already discussed. You can read what I have here on the screen, but yeah, pillar two is super important. Let's go over into pillar number three, which is the last pillar, and that is theta." So, it's really crucial for you to understand so you avoid blowing up your account.

A lot of people they will hold options until the last day and especially an out-of-the-oney option it's going to be losing so much value in the last kind of time that it has. So what is theta? We discussed it earlier in this course but every option that you own has a meter running on it. The meter has a name and that is theta. Theta is a Greek. So what is this Greek? Well the Greek that measures how much value your option loses each day purely just from time nothing else.

This means that no other factors are important. We're just talking about theta. If the stock moves, if volatility increases, theta can change and theta is dependent on the other factors. Okay, but theta by itself all things being equal usually is just time passing. Okay, so basically the rent that you pay for holding the trade open one more day. Every option price is built from two parts. Intrinsic value, which I referred to earlier, and exttrinsic value.

How far in the money your strike already sits is intrinsic value. And exttrinsic value is everything that you paid on top of that. Theta only ever eats the exttrinsic part. It's not going to eat what you're already intrinsically made money on. So here's a chart intrinsic versus exttrinsic value on options. And you can see here how they do move together as time passes and the option is decaying. You can see here how exttrinsic value will go down with time.

Okay? And it's actually pretty linear. It's not perfect. You can see here it's not perfect and that's because it depends on the stock as well. When the stock goes down, the intrinsic value goes down. You can see here how the exttrinsic value will go with it and that's just it follows the stock but not in a perfect way. Okay, they don't rise and fall together perfectly. You can see here how exttrinsic value all that time it's kind of more I would say more linear.

Okay, whereas intrinsic value it's going to be moving with the stock more. So whenever the red kind of line here moves up, okay, intrinsic value is going to jump up and be much more sensitive because it matters a lot more. Intrinsic value matters heavily heavily for an option. You can see here every time it has a little bit of a bounce, the stock goes up. Now, why would this red line not bounce as hard here as it bounced here?

Okay, this is interesting, right? Because there's a bounce here, the red went up, but the red went up more here with this bounce even though intrinsic value is the same here. Why would the stock price here jump up a lot more yet the intrinsic value not go up as much? And one of my explanations for that is you can see here a drop in exttrinsic value. This could be a drop in volatility and the other factors that I discussed.

Volatility, interest rates do impact LEAP options. Not in a severely heavy way, so I won't get too deep, but I just wanted to say and show you that this is a very interesting chart right here because the stock price jumped up a lot, but intrinsic value did not jump up as much. That's because of the fall in exttrinsic value. You can see here how intrinsic value is more. It's you know the blue is thicker here but the green has severely you know fallen down which is exttrinsic in time value which can come as value from volatility and time and because this has fallen so much even though the stock is going up well your total value here hasn't really changed.

So, at day, you know, 150 left versus day 210 left, this 60-day period, you haven't made any money yet, the stock has gone up. And that is possible with LEAP options. A LEAP option will not gain value. If enough time passes and volatility is falling and even the stock goes up, you can still be at the same exact point. As you can see here, this is very, very interesting to kind of analyze. All right, let me show you like an example of a option on Tesla.

This was a little bit ago as I was making this slide two weeks ago, but doesn't really matter. I just want you to understand Theta and as I'm going through this video, just keep that in mind. I just want you to understand this. So Tesla $341 per share or whatever two weeks ago, um you can see this option chain right here. I want you to really look here. This is um a little bit different because I'm typically using Robin Hood, but obviously I work with people that have different brokerage accounts.

Fidelity and Charles Schwab and I have a lot of international folks. Um I have people from UK, from Italy, from Germany. And for those folks, inter international uh interactive brokers, excuse me, is what we use. But anyways, let's uh take a look here. This is Charles Schwab. I have another account um that I use in my private coaching, my one-on-one, my second portfolio, which I don't really share publicly. But here is a Tesla Leap option.

And the Tesla Leap option, you can see here the symbol, the dates of expiration is June of 2027, 300 strike price, buy to open. Now, I want to kind of go over some details here. So, the share price is about 340. The strike price is 300, which is an in the money option, right? Expiration date June 2027. And the example fill is $86 or 8,600 total. So a fill just means how much you're going to be paying for the LEAP option, aka how little someone is willing to sell it to you for.

If you're selling an option, it's how much someone was willing to buy it for. So let's just go over the theta example, which is the picture that I'm trying to paint for you here. So let's say the example theta here is.08. And if you zoom in here, you can see the theta is 0.0. 0815. Okay, we can see the other Greeks here. The delta 70, which is basically my sweet spot. I like 70 delta. You see gamma here, theta, vega, but the most important is really the delta and the theta.

Okay, the delta we discussed and the theta here is 0.08. Okay, so what does that really mean? Well, that means that every single day this option is losing $8, which is actually very, very low given how much you're paying for this option. In total, $8,600 because there's so much time on the option every single day loses $8, which to be honest, I would argue as very, very little. It's losing very little value. So, to rent out, you know, a 100 shares of Tesla, which here would be like 30 grand, you're just paying $8.

Amazing. That's the value and advantage of a leap option. So your own chain will show something different. Just pay attention to the theta and understand as a percentage return how much it is per day versus the amount of capital that you're putting up. So again for me in this example 8 days in cost which is I would say 8 days very very little $8 per day $56 per week and across a month right that's like $240 across a 30-day stretch.

And the meter does run on weekends, so time goes whether we want time to go or not, right? I'm going to be losing more hair whether I want to or not. Um, time time just goes, right? Time is money. So, Friday close to Monday open charges you 3 days of theta. That's fine since theta is not that much. And of course, more news comes into the market and the stock can go up. So, I wouldn't be too concerned with that. Now, here's the flip side.

Theta is the admission price for owning time. So every option buyer pays it on every contract every single day. And the question that decides to trade is will a stock move enough to outrun it. So when I scroll up here, will the stock move enough to outrun it? That's the most important point. You can see here how the most value this option had was actually in the beginning. So this option ended up being not successful.

Okay? as time went on, even though the stock was higher than it was at a certain point, it never really made any money in in this uh in this diagram. So, can you outrun Theta is a really huge question. Now, how theta eats your LEAP options every day? We kind of went over that. So, quick here and then we'll we'll keep it moving. We'll keep it pushing. The daily charge changes as expiration gets closer. It, you know, rapidly accelerates.

So, we went over this earlier in the video, but here is how fast it accelerates and especially in the last portion of time. I would not really suggest that you hold an option. All right, guys. Let's continue on with this course. It's obviously taking me a long time. Hope that you're appreciating this video. If you are, leave a like and subscribe. All right, so how do I pick the expiration date? Expiration date is incredibly important.

Picking the expiration date is, yeah, it's imperative to your success because too short, you're going to be dealing with a whole lot of theta. My default is 9 months, which you know, honestly, it's not like textbook definition of a leap option, but I'm okay with something that's around 9 months. That gives me three quarters of basically work to have in the LEAP option itself. And then after 3 months, when there's 6 months left, I told you that's when I evaluate an option when it has 6 months left to expiration, giving me 3 months.

And honestly, a lot can happen in 3 months. So that's pretty much my minimum giving it 3 months and at the 6 month mark evaluating. But typically one year out is also a gold standard for a leap option. So say that you're eyeing an Nvidia leap, right? Nvidia 225 might be a little bit different as you're watching this video. Maybe several weeks, doesn't matter. 225. Okay, we're going to take that price and we're going to look at expiration dates out in June, September, and December of 2027.

Basically 300 days up to almost 500 days. So around this length of expiration is the sweet spot. Okay. Again, time enough time is super important. It's kind of like a plane taking off from a runway. If the runway is too short, the plane cannot take off. It's basically not even a leap. It's just a short-term call option. And buying short-term call options is typically a very big losing strategy. So 9 months is my preference, especially when I have like a shorter term view on a stock or just simply one year.

Now 2 years ties up capital for too long. So, I do see some investors saying, "Hey, Henry, I'm super bullish on, you know, say Nvidia, I think it's going to be, you know, 10 trillion, 15 trillion, 20 trillion. Can I just buy a LEAP option that's out for 2028?" The answer is yes, but I would still kind of say that's suboptimal just because that's capital being tied up for way too long. So, now you're kind of on the other end of the extreme.

So, in my opinion, it's just really not worth it. Now, remember, Theta bites hardest near the end. So, a longer expiration buys you time for your bet to be right. Here's kind of like a picture, a funny one. But Apple will go up tomorrow. No, no, no, no. Let's not let's not play that game. If you want to watch other channels, I don't even know any that are that short-term minded cuz that's clearly just not the way to go.

Okay? Or Apple will go up in the next year. Yes. Yes. That's that's the mindset that I like. So, you want the DK window to still be very far away. Okay. And I'm just going to remind you about this image, and we're going to keep it pushing cuz you've seen this image a couple times. But here is kind of like the the no-go zone. Okay. This is the no-go zone. This is the hot crazy matrix. [laughter] You know what I mean? There's this one video that went viral, but that's off topic.

So, here's the beginner mistakes. Hold the leap too long until it's about to expire. That is biggest number one red flag mistake that you can do. Uh and then the next one is then doesn't understand why the value of their LEAP is absolutely tanking. So yeah, these two are connected to each other. Now let's move on and talk about stock selection. So the stock is the whole trade. A LEAP option won't work if the stock doesn't go up.

So obvious, right? But yeah, people forget that they buy LEAP options on crazy stocks and those stocks just don't do anything. Well, you can just go for something that's traditional and standard like the Mag 7. Mag 7. Apple, Microsoft, Amazon, Google, Tesla, Meta, Nvidia. These are the stocks that honestly, yeah, I'd be very happy to have a LEAP option on. So, this is like the perfect recipe. Just like, you know, some chicken tikka masala.

I love my Indian food. Yeah, this this is the recipe. This is some, you know, garam masala making it nice and spicy but safe at the same time. So, here in this leap strategy, there's only like two main ingredients. It's not like you have to cook up a whole dish. That's so difficult. Honestly, like cooking is harder than this leap strategy that I'm teaching you. So, stock selection, which is number one, don't pick the right stock, you're gone, right?

And then two is entry. So, I showed you entry on technical analysis. Um, ideally, you want to buy a stock and buy a leap option when it is towards the bottom of the bowlinger band towards the 52- week low. That's more of your ideal situation to be in. So, the company that you choose is the most important. I'm going to open up my portfolio now and just go through some LEAP options. But I wanted to remind you if you want up-to-date personalized recommendations for LEAPS.

You literally want me to hand select and show you what I'm doing. Well, you can learn more about my Discord community. Just last month, I added some shares to a stock that I think is going to really blow up and it's super undervalued. Yeah, this is pretty much what I write in my community. I said, I bought 25 shares of this stock just dollar cost averaging. I like the stock at these levels. Very, very simple updates that I do all the time.

Anything that I do, I post right away on a discord and they can see this in Henry trades within the Discord community. So that's what this looks like. So that's where I share all my leap trades and other trades live in my community. So now let's jump into my screen. Before I go over the five detrimental leap mistakes, I just want to show you some LEAP options that I am looking at right now. One of them being Google. So let me go into Google here.

By the way, the difference between Google and Google is just voting rights. So it's not that important. You don't have to be too concerned with the two different stocks. It's the same thing. Just one has voting and one doesn't. Now, I am up $98,000 on Google and I'm actually running um a couple different strategies which are different from this video and yeah, just transparently showing you everything shows that I'm down, but I've had many options expire.

I am option selling on Google, but I think option buying will do just fine on Google. I am very bullish on Google in general. I think search is going to continue to explode. Obviously, they have a strong growing AI business which they're investing into. In fact, they they invested so much into AI, they had negative cash flow in the recent quarter, but that's going to change. Obviously, that's like a one-time thing. But yeah, you can see Google here was pushing towards $400 per share and now the stock is at 335.

So, I think that it can push $400 again in 2027. So, pretty easy strategy is just buying a LEAP call option. I'm going to go out into September. Actually, I can even go out to December, December 17, 2027. And then the way that I like to do is just again buying deeps. Okay. Deep in the money leaps. Yeah, deeps. I like that. I like that term. So, yeah, let's go for like 320 right here. You can see that it's almost 70 delta, which is pretty much my sweet spot. 66 delta here or 67 delta.

The implied volatility is 35. So, it's not high. And that's actually okay because the lower the implied volatility actually the cheaper the price is to buy the option. So a low implied volatility is actually a good thing when you're buying a leap option. Yeah. Essentially volatility can increase and if volatility increases the value of the option goes up. So even if the stock doesn't do anything actually the value of your LEAP could literally rise from nothing besides implied volatility going up.

So implied volatility is actually a good thing when it rises and you have a long leap option. [snorts] Okay. So the 320 strike here is going for $70. So the break even here is, you know, $3.90 basically, which is expensive. If we think that Google is going to be $400 per share, there's not a whole lot of money to be made here. However, the caveat is I think Google can be $400 per share well before December 2027. So yeah, if it's $400 in summer of 2027, then it's going to have $80 in the money value, right?

So, it's going to be 400. And if you know the strike price is 320, you're 80 bucks in the money. So, it's going to be worth at least 80. And then because it's going to be summer or June, whatever, December is still like 5 months away. So, it's still going to have a lot of theta. Pretty hard to say like ahead of time how much theta or time value the option will still have. But I would say that if there's 5 months left, well, we can do a comparison right now.

So, first step is to calculate what our exit price will be here in summer when Google reaches 400. I'm gonna estimate basically I'll show you. So first of all, step one is in the money value. That's 80 bucks, right? So $80 will be in the money. Okay, so we know we're buying it for 70 and it'll be at least 80. But how much more than 80? Well, why don't we just look at an option that already has currently like five months left to expiry.

So 5 months would be roughly 5* 30, 150 days. So let's just go for January. So now we can see an option that would be you know let's just go for an in the money option. So we can see let's say 320 would be in the money. There's 5 months left. This option is in the money by 15 but the option is worth 36. So if we do the math there right 335 minus 320 it's 15 but this is trading for 36. So the difference there is like 20 bucks.

So this option has $20 worth of time. Okay. So roughly 5 months is worth $20 worth of premium on this strike price, right? I'm just doing some back of the envelope math in a weird different way because I believe looking at things, calculating them, doing estimates is always to learn, okay? Like in my community sometimes I'll do like weird explanations and I do weird explanations that are different because I think that's what helps people understand things.

Okay? Like for me, I like to look at extremes because then I can understand like what can break, what can go extremely right, and what can go extremely wrong. So I just want to do this back of the envelope math so you can understand a leap options profit in a in a different way. So yeah 320 right this is worth 36 but it's in the money by 15. So it's really about 20 $21 of time for a fivemonth option. Okay so going back to our first example if we have $80.

Okay let's go back here. So if this option is worth 70 that we pay for it is going to be $400. That means it's going to be 80 in the money value plus probably at least $20 worth of time value, the option will be worth probably at least $100, potentially more. Okay, so that's pretty nice because from $70 to let's say a little bit over $100, which the option will be worth if Google goes to $400, well that's basically around 50%.

So I find that pretty attractive because from now until June of of summer, that's 9 months. So 9 months 50%. That's pretty much around the exact ballpark of what I consider excellent. I consider that excellent scaling at 50% in 9 months is like peak level better than Warren Buffett. Literally better than any investor that's even honestly gambling and getting lucky. This is like literally peak of what I would consider amazing.

Right? So this is exactly what I'm talking about. 9 months 50% would be amazing goal for me. Um and I have done that many many times in uh different ways not just leap options I've done different strategies but overall when I get that type of return I am very very happy like I had a leaps challenge back in January and then from January to July it was a one-year leap challenge and I ended it in July because I had 50k and then when it was 100k in July I just had a meeting and said guys I know we're ending sooner here but are we upset that we're ending sooner where we uh you know effectively took a 50k K portfolio to 100.

So, we're pretty much done here. And then I said, "Hey, you guys ready for one-on-one?" A lot of people took me up on the offer because they were extremely happy with my outcome. Okay. So, they were extremely happy. They were like, "Yeah, sure. We can end it earlier and I'm ready to move forward and do some one-on-one coaching." So, yeah, I mean, transparently, it was it was amazing. It was amazing for them. It was amazing for me.

It was a win-win. So, um probably will do that in January again. But, um yeah, so that's the kind of the first trade is Google I would look at. I do like INEN a lot. IN would be like the second it would be kind of cheaper leap option as well because IN general is a cheaper stock. So when a stock is cheaper itself and then you buy a LEAP option on it then yeah it's it's very cheap overall. I am down on Iran. You know what's interesting when you're down on a stock I can basically like double down by buying shares or I can buy a LEAP option and when it recovers I can recover my money sooner.

So yeah, I'm looking to do this. So if you look at buy call option, okay, I'm going to go out. I'm going to go a little bit shorter term. I think I has a lot of volatility. I'm going to go for like May 21st, 2027. And honestly, like I'd like to go like higher risk here. You can see here, actually, that's not higher risk. The delta 71. So that's actually exactly what I'm looking for. So this option right here, the premium is $14.

So the break even is 48. I would really need I rent to move a lot, but again, I would probably cut this a lot sooner. So around January time, if my rent is at 50 bucks, then yeah, I'm going to be again similar situation. I'm going to be in the money value by $15 and I still have a lot of time value left. Okay, as you can see, that's basically what I do with my strategy is I'm not holding until expiration. You know, we talked about that like two or three times.

Now, what I'm doing is I'm waiting for a increase in value on the stock. My LEAP option increases disproportionately a lot in value and I have a lot of time left. I take profit and I get out of the leap option because I'm up a lot. I'm up my goal profit. So, if my goal profit is, you know, I usually like 30 to 50%, but sometimes it could be 50 to 80%. Depends on the situation. I'm not going to go that deep down the rabbit hole here, but essentially 30 to 80%, I find an exit point.

Obviously, that's a big difference. So, optimizing that really improves and scales way quicker. But pick an exit point and once once I have that, I don't need to hold it longer because at that point I have more and I stand more I should say to risk and lose than I do to gain. Let's discuss the five most detrimental leap mistakes that will cost you thousands of dollars. Leaps hand you 100 shares of upside for a fraction of the cash.

Same lever that builds your account can actually wipe it out just as fast. So here are the five mistakes. Number one, this is a big mistake, which is buying the cheap strike price. Two calls, same expiration, one is way cheaper than the other, and you get very attracted by the cheaper one because who doesn't want a deal, but you get what you pay for. So, Apple is the example here, roughly $39 per share in this example.

And if we look at a LEAP option expiring June 17, 2027, we can see two different strike prices. Okay, the first strike price is 270, which is an in the money option. And the next one is 360, which is an outofthe-oney option. The first option here that's in the money is $6,290. Okay, kind of expensive. So, a lot of beginners that are running the LEAP strategy will look at the 360 strike and say, "Well, hey, this LEAP option is $1680.

Okay, I like that. 1680, that's way less than, you know, $6,290. I like this one. Seems like a better deal." Well, the beginner who thinks that way and says, "Wow, look how cheap this one is." is making a big mistake because the pro goes like this. This one might be a bit more expensive, but now I had a good cushion in case that I'm wrong and it has a high delta ensuring that my option will move similar to the stock.

Two things are going on here that the pro is thinking about. First one is cushion because the option is already in the money. It already has value straight away. So even if the stock goes sideways and it doesn't do too much, you can cut out the position, get out of it, and not lose that much money. But this position right here that's out of the money is going to decay extremely fast because it's very sensitive. If the stock is not moving in the right direction, then investors, traders, and just the model that is valuing this option is going to plummet.

And it's going to plummet because the chances of this becoming in the money falls and dwindles very quickly. Okay? Whereas this, it already has in the money value. So even if the stock is going sideways, it's not losing as much money as quickly as an outofthe-oney option. Okay? So that's what I mean by cushion. And then high delta is basically, let's say that you're bullish on Apple, right? I like Apple a lot. So if Apple goes from, you know, $39 per share to $329 per share, that's a $20 increase.

Well, this option right here, because it has a higher delta of.75. Well, 75 time $20, $15. So this is going to increase by $15. Great. Awesome. Right. this option. Yes, it is actually a lot cheaper and it will increase by a lot less and this will be very attractive but overall at a much higher risk. So take the.34 multiplied by $20 and that's going to be like six bucks. Okay, so this one moves by 15 bucks. This one moves by six bucks.

So you know you get a much better move here. Although I will admit the percentage here will be higher but it's not worth it. It's just not worth it in my experience. So the beginner grabs the cheap one almost every time. Feels like a smart move. It feels like budget friendly. But investing and making money is not about always being budget friendly, right? It's about scaling efficiently and paying attention to your risk and reward ratio.

So it's really like the opposite. A budget friendly could could completely be, you know, backwards. It could be cheap, but guess what? You get what you pay for. So there's a reason why that option is cheap. It's because it has high risk. Think about options basically like a car. So if you need to get from point A to point B, got three choices, right? So here's the three choices you have. Option A is you have the most affordable but actually most risky.

The road can be very bumpy with this car right here. I mean, what if it breaks on you? What if you have a really long trip that's very important to you to get to the end destination? I mean, you can rent the cheapest car, right? Uh it's the most affordable, but yeah, there's more risk. And I'm actually undermining the risk cuz the option could could obviously backfire much more than than uh this beat up car. But you get you get the picture that I'm trying to paint here, right?

Here's option B, which is the mid-range price. This is the most reliable, actually. So, this is actually the most reliable. This is the best choice, which is option B. And then there's option C, which is super expensive. Will definitely get you there. Maybe it's a lot of fun for you, and it'll get you to the end destination, but will also break the bank. It'll also break the bank. And not to mention what this is a Lamborghini, but you know something like a McLaren.

I thought this was McLaren for a second. I forgot which image I put in for my slide. But um yeah, Lambo, McLaren, you know, I'm not a car guy. Same thing to me. But um it will break more often on you, especially if you're going a long distance. You're going to need maintenance, etc., etc., right? So option B is going to be the best. And that's basically how I look at um a leap option as well. Right? I'm choosing option B, which is the middle ground.

Okay, let's go into the mistake number two. So, thinking that time protects you. Okay, so I've got six months left. I can't really lose. I got a lot of time on this option. That's the thought that people have right before people really lose. You know, they're all comfortable until boom, they get hit and they're like, "Wow, why did this leap option lose so much value?" A leap still loses value on a stock that goes nowhere.

It still does lose value. It just loses less value because it has a long time horizon. But after six months, well, it starts to kind of speed up and kind of creep up on you. So you still lose value on a stock that drifts the wrong way and the extra time doesn't cancel that out. It just slows it down. So basically, you're buying more time. You're not really buying immunity. So the scary situation where the stock starts to crash is still going to hurt your overall LEAP option.

You are going to lose money. So you really need to assess is the stock, you know, having a slight pullback is like a building going under construction. Okay? If it's going for a slight pullback, but the business is still good. Well, the building is obviously going to rebuild and it's going to be just fine. And typically that does take time, but maybe it's just the market going down and not the company specific level.

You always have to separate market versus company specific level. That's what I do all the time in my coaching is because it's emotional. When the market goes down, people want to second guess themselves. And my job honestly all the time when I do my one-on-one coaching is just to simply calm someone down and say, "Hey, don't make a mistake right now. Just hold a position. Don't don't freak out. Position is fine." And sometimes that simple, you know, guidance is what an investor really needs.

That could literally save someone thousands of dollars from panicking, getting emotional, and hey, they they saw a bad YouTube video or whatever. No, no. That's that could be a really huge mistake. So, um, you do have to determine whether it's just under reconstruction for some time or the company fundamentally has broken down and this is what's about to come. Some really big wear and tear on the stock where it's not going to be recoverable.

But a company with a broken down fundamentals like a building with a poor foundation, that foundation's about to break. So, that's the second thing that you really have to pay attention to. All right. So, mistake number three is treating it like a small trade. One contract is 100 shares of exposure, right? So visualize the leap options leverage. So one contract, whole bunch of control. Great, right? That's the whole point of a leap.

Also, that is the whole risk as well. So of course, when I paint this strategy, it's not like, hey, you get all this control for a fraction of the cost. That is true. But that fraction of the cost that you pay, that amount of money can be small, but volatile, risky, dangerous, and it's possible to lose all that, especially if the stock comes down and, you know, you don't end up closing that option and managing it properly.

So, people spend a $6,000, you know, dollars on a LEAP without really thinking and then they forget the entire value of the option can vanish if the stock goes down below the strike price before expiration as well or by expiration of course. But here's kind of a chart. Okay, so in the money, out of the money, you could lose everything that you paid for if you wait until this point. So it can be all fun and games and then you're approaching expiration, you're like, I'm not sure what to do.

And you hold too long and then it goes out of the money and the expiration time is creeping up on you. And this right here happened really fast. You can see how everything is fine, fine, fine. And then maybe in the last two months, you get a really sharp decline because the stock drifts lower. And this is the ultimate worst case scenario that can happen to a leap option. And this is very tricky to play. This is very very tricky because you know you got two things going against you out of your control, right?

The stock market can go down, it can bring your stock lower and then the time creeping up on you and then all of a sudden boom, you end up becoming out of the money and expiration has unfortunately creeped up very hard. So keep in mind this is the worst case scenario. I'm just showing you what can happen on a riskmanagement perspective because that is my area of expertise. When I was working at Goldman Sachs and different hedge funds, I had experience on the risk management side of option trading and and portfolio management.

So, that is something that I bring to the table that I don't see covered really anywhere else. A lot of people are talking about, hey, this is exciting. This is great. I've seen a video like, hey, replace your shares, right? Nobody's talking about the risk, how to manage the portfolio. That's what really sets someone apart. It's not hard to buy a LEAP option. I'm sure this entire video has been insightful, but um at this point you're like, I get all this, right?

Um just buy a LEAP option on a good stock. I get it, Henry. But um risk management is what sets the winners, big winners from, you know, regular winners and and losers really. So So assume that the premium can go to nothing and then decide what you're comfortable putting in and be careful with position sizing while you're still learning the ropes here. And even if you're good, again, this can happen even to the best of us.

Um, it actually has happened to me multiple times. You know, still managing just because I know everything doesn't mean that I'm immune to some negative moves. Still, sometimes I have very hard decisions and um difficulties in different situations, but handled it very well overall. All right, let's go into mistake number four, which is never rolling. So, never checking in. So, I haven't really covered rolling in leaps. rolling is probably something that I won't teach on YouTube that I will save for my one-on-one coaching because I try to give probably 50% of everything that I know on YouTube and then I hold back on some stuff especially more advanced stuff just because I don't think it's suitable for YouTube and then transparently I am a coach so of course I want to have some coaching students but I hope to give a lot of value and when I look at rolling I'll give you the basics right now but rolling is probably a much harder topic that ideally you should have you know, more focus on and ideally I could show you more about it, but let's go over the basics.

So, you buy it, you forget it, and you check back in a year. Well, LEAPS are not as passive as these other strategies that I talk about like selling puts and covered calls. Those you can get aside and then that's it, right? Um, but here the benefit is higher growth. You the start at the start, you don't have to check as much, but as time starts ticking down, you should check more regularly. So, you can consider closing depending on what the stock is doing, right?

And I gave you this chart already the fourth time in this video, but this is the most important lesson I want to teach. But um this is much more advanced. If you want to actually roll, this is much more advanced. And I don't even think I've ever covered this on YouTube when it comes to leaps. I only really go over this in my program, but in rare occasions, you can roll a LEAP option. Okay? Be very careful because if you do roll a LEAP option, you don't want to get into the trap of paying more and then the leap option continuing to dwindle away.

Okay? Okay, you want to reestablish a new position. So sometimes I'll close a LEAP option, reestablish a new LEAP option, but I want you to be careful because if you reestablish a new LEAP option and the stock does not go in your favor, you are going to lose money twice. So, it's essentially kind of like doubling down, but if the stock goes up, which you know based off of technical indicators, if that is likely to happen, then this is amazing because essentially you can make all the money that you're down on a leap option and more a lot easier than that original one leap option which has dwindled a lot and doesn't have that much time left which will also have a lower delta so it's less sensitive.

So, I want to readjust and reestablish a higher delta. So, that's what I do with uh rolling. So yeah, that's basically like the basics of it, but I'd be careful. All right, mistake number five, and uh this is trading someone else's conviction. I see this way too often, and I hate this because right now AI is changing everything. Okay, I see a lot of people going to AI and listening to AI. I see a lot of people going to their friends and a lot of people are going to YouTubers for stock and trading advice and I think that's a massive mistake.

You should understand how to do this yourself. You should not listen to other YouTubers. Hey, me included. You should fact check me as well, right? I'm making videos. Um, I've been doing this before a majority of other YouTubers. I was very early on YouTube like seven years ago. There was no competition when I was on YouTube. There was no one even talking about options. Now, there's a lot of people talking about options.

There's a lot of people giving stocks and trades. And here's my five top stocks for this month. That's a very popular topic. However, I urgently caution you to be careful because a lot of people are creating content using AI and then a lot of people are also piggybacking off of each other, okay? Because they know a certain form of content is popular. So, a lot of people will talk about the same stocks, okay? Be very careful.

I wouldn't listen to other people when it comes to leap option because it's your money, man. Like money that you worked hard for. Don't blow it on, hey, I think this is the case. You really need conviction yourself. And I would I would urgently caution you to be careful of friends. Heck, family. Sure, they can mean the best for you, but you know, they're not an expert. They might be steering you in the wrong direction.

Or these friends and family might be listening to these YouTubers who honestly like a lot of guys don't have the actual background. Okay? Even if they say they're a banker, investment banker, whatever. Yeah. I mean, investment banker is still not doesn't mean that you're a good investor who has actually traded. Okay? So, I've traded a lot and that is very very important distinction because even someone that could have some financial experience does not mean that they are going to be profitable in the long term.

Remember like literally 95% plus of financial experts are losing the stock market. So even listening to someone who says I'm a financial this and that still track record is most important and lots of years of experience actually doing it not understanding what finance is but actually knowing the stocks that they're investing in. So yeah don't put your money into someone else's opinions. Please research for yourself. What I pride myself in is actually eat my own cooking.

All the trades that I have in my portfolio and whatever I talk about in my community I post live because I want to eat my own cooking. I have actually 100% of my net worth in options. I don't own properties. I don't have cars. I take taxis wherever I go and I travel a lot. So, I don't own anything. I believe in renting everything. All the positions or the strategies I teach on this channel that I'm doing, I'm genuinely doing with all my money.

I got everything I got. Like everything I got here in my portfolio is everything that I'm showing. And I use this portfolio to live on. So, when you see my portfolio standing still, it's because I'm right now in my retirement phase. Yeah, I'm pretty young. I'm in my 30s, but I'm actually in my retirement and my goal is my goal is actually right now not to scale and get richer because I think that if you have too much money, it's actually not good.

You know, it becomes a risk. Like just it's just not good to have too much money. That's my belief. I think if you're retired and you're like for me, if I have like this portfolio which hovers around 4 million, I just take out literally like all my profit. Yeah. Like many months or 50k plus, that's enough money. Like I'm not trying to get greedy here. Like I donate, I give, I spend because I think a lot of people they get really rich.

Like I know I have some students that have like not a lot but they have like 10 mil plus and these guys are like I have nothing to spend on and you know whatever. So you just got to be smart here. My goal is to be comfortable to be like a normal person. So anyways, I eat my own cooking and I'm in retirement. So I hope that I'm the best example of someone transparently showing you what they're doing and I do this 100% for myself.

Okay? I pride myself on that. Yeah. So, all the orders that I place, I gave this picture to my editor. I don't know why he like blurred all this out. It's not a secret. I show my portfolio all the time. So, I'm not sure why we blur this image out. But anyways, everything that I do, I show. Okay. So, don't take shortcuts. So, how many times do you really need to be reminded? If it sounds too good to be true, then it probably is.

Make sure that this is a strategy that you utilize 10 to 20% of your portfolio. If you have a small portfolio, 20% is fine of your total allocation. If you have a bigger portfolio, take the strategy down because it is a double-edged sword. So, let's continue on here. You can read some of the notes that I have on my screen here. Let's move off into the sixth mistake, which is refusing to take profit. If the leap is up 50%, it feels amazing.

You're like, how much higher can it go? Right? There's that like game. I don't know what that game is called. never played, but it's like um this like line that keeps moving up and you can stop at any time and if you don't stop it like blows up, right? So, it was like with something with crypto or whatever, but I don't want you to playing that game, right? Yes, life is a game and the stock market's a game, but you know, I prefer predictability and stability because obviously I take this stuff very seriously.

So, if you're up 50% and it feels amazing and you're thinking, "How much more do I have to run?" Don't let the greed talk to you. Just take profit. I always recommend checking the Ballinger band for example. So here's like Tesla as an example. Yeah. If it's at the top of its Ballinger band, you're like, how much higher can it go? It's like, man, look at the Ballinger band. It's already at the top. It's already, you know, at an inflection point that it's not likely to go that much higher.

So just take the profit. Just take the profit and go. Like you don't have to be too greedy. So, I want to show you this picture right here because a lot of people are in this cycle. And when you're holding the stock for a very long time and it goes above your bowlinger band, you're basically in this area right here, which is the point of maximal financial risk. You're experiencing euphoria and then you're like, "Hey, this market's hot.

It might continue to go up." Well, you know, I you can see here what happens, right? So, you ideally want to get out somewhere around the thrill or even excitement. getting out early and taking profit early is better than than being in denial, having desperation and all this other stuff, right? So, yeah. So, you don't want to be in the FOMO cycle. You don't want to um get too greedy. You just want to be calculated. That's what I teach.

Just calculated decision-m stability. So, if you want to access all my trades and follow along with exclusive info and strategies that I'm not really sharing on YouTube, I'd love to have you. Hope that you learned a lot from this LEAPS video and this LEAP strategy. All the information that you may need is in my description. It's typically the first link in the description. If you have any questions, make sure to comment down below and I'll make sure to read through most of them.

And thanks so much for watching. Hope that you subscribe and I'll see you in the next