if you could profit on the best stocks that are dominating their markets and pay close to ½ the price?
YES, a 50% OFF SALE!!! I love a good sale!
I have made over 100% Returns regularly using this stock option strategy.
And in today’s video I am going to take you step by step showing you how to make money the same way!
This is a LEAPS Options Tutorial for Beginners. Be sure and watch to the end as I’ll cover a special tip that will help bring in even more profits!
In this video we will cover:
- What Are LEAPS Options?
- Why Is It Beneficial To Buy LEAPS Options?
- How To Buy LEAPS Options (Showing some great real examples on the option trading platform)
Hey guys, Darren here. We have a video for you here today.
But first, do me a favor and please hit that like button real quick to help get this video out to more people.
Today we are going to be covering LEAPS options with a complete tutorial showing how we can profit by using them to control stock. And we will do this at close to ½ the cost of buying stocks outright.
I think it’s important that we understand all the different strategies and ways that the rich are getting richer. So that we can have the tools to do the same and do better for ourselves in any market while doing it safely.
I promise that we will dig into many different detailed option trading tips and tricks, and dive much deeper into options in future videos.
So after you hit that like button make sure you subscribe so that we can learn to be consistent and highly profitable option traders together.
And also be sure to download the FREE options Workshop in the link below.
It talks about the two main benefits of trading options over buying stocks.
DISCLAIMER, I am not a financial planner and I am not recommending trades. Please do your own research and if you are new or learning options, I recommend you start small.
What Are LEAPS Options?
The term long-term equity anticipation securities (LEAPS) refers to publicly traded options contracts with expiration dates that are longer than one year, and typically up to three years from issue.
So Darren, what are short term options called?
Options….
Why Is It Beneficial To Buy LEAPS Options?
One LEAPS option contract allows you to control 100 shares of stock for around ½ the cost of buying the stock outright.
So since you are paying less, your ROI or return on investment will be higher. In other words you are leveraging returns.
You are also reducing risk. The max you could lose if the stock went to zero is the amount you pay for the option. So close to ½ when compared to losing everything if you bought stock and the company went bankrupt. Then you lose everything!
The best way to show this is to……….. just jump in and show you….
How To Buy LEAPS Options
Alright, we are going to take a look at how to place a LEAPS option trade on the option trading platform.
You can do this with any brokerage on any platform. We are going to the Tastytrade platform. Tastytrade is one of the best brokerages for trading options. It’s the one that I have used for years and they are the guys that developed TOS the Think or Swim platform and sold it to TD Ameritrade which is now Shwab and the one they still use.
Tastytrade is even better. Right now you can get cash back when you open an account.
I’ll put a link down below and if you fund with at least two thousand dollars the channel gets a small fee that really helps us out and is much appreciated. You really need to have a couple thousand at least anyway so that you can place a few different trades.
Alright, we are going to take a look at a stock Palantir.
First off let’s take a quick look at why we are looking at buying a LEAPS option in Palantir.
When we look at the chart on Tradingview, Palantir was up to around 35 prior to the pandemic at the beginning of 2021. Because it is a high growth stock it really moved down with the onset of the higher interest rates.
There was just a recent big move up since everyone realizes that Palentir is a dominant leader in software platforms that analyze data.
So you may want to wait a minute for a pull back and then do this if you are considering Palantir.
We know data analytics and AI is going to continue to grow at a rapid pace. And Palantir is a dominant player in both the commercial and government defense markets.
So we punch in the ticker PLTR in the upper left on the trade page and open up the option chains.
Now there are regular options and Weekly options. The regular options typically have a little higher volume. Since we are going way out we click on the last one and open the Jan 17the 2025 chain that is 548 DTE Days to Expiration.
We click on the Ask to buy the 10 strike Call option for $10 which is really $1000 since 1 option contract controls 100 shares of stock.
Now the current stock price is $18. So it would cost $18 x 100 shares = $1800 to buy 100 shares of Palantir stock. We are controlling the same 100 shares for almost ½ the cost at $1000 since 1 $10 option contract controls 100 shares.
But stay tuned, I’m going to show you how to get the cost down even further!
We switch to the curve mode in the upper left and see that our max profit is infinity. Yes, so just like buying 100 shares of the stock outright, we continue to rake in the profits as the stock increases in price over time.
If the stock just gets back to it’s previous high of $35 then our profit will look something like this.
We would sell our $10 Strike LEAPS Contract for $35.
Our profit would be $35 – $10 = $20. However, remember we paid $10 so we need to subtract that as well.
So it would be $35 – $10 Strike price – $10 Cost = $1500.
And an important note: You don’t have to hold the option for a year or more until expiration. That option contract will increase in price as the stock price moves up so you can sell the LEAPS option and bank the profit at any time.
You can actually see that $1500 profit right here on the chart on the Tastytrade platform.
Isn’t that great! Remember to use the link below to open and fund your Tastytrade account with at least $2K!
Now, I mentioned there was a special tip that would bring in even more profits.
Here it is..
We can also sell a Call against our LEAPS option! Yeah, just like a covered call strategy! However, because we are using a LEAPS option it is called a PMCC Poor Man’s Covered Call.
So we go back to the option chains and open up the August 18th regular option chain that is at 30 DTE Days to Expiration.
We click on the Bid to sell the 20 Call option. By doing this we collect another $110. So you can see where the total cost is now $890 and not $1000.
Switching to Curve mode, you can see that it does cap our profit. If the stock price that is currently at $18 shoots up above the $20 strike price within the next 30 days then we could be assigned short stock. That just means that we have to sell 100 shares of the stock.
However, our LEAPS option has increased in price much more. So we can sell it to easily cover the short position and be out for a profit.
Normally stocks move up and down over time and don’t just shoot straight up. The beauty of the PMCC is that we can then just roll out our short Call option month after month and collect additional premium while our LEAPS option moves up in value.
It also reduces risk since if the stock does not move up or stays where it is at then we keep that premium received from selling the call every month. So in this case it was $110.
Doing this every month more than covers the cost we paid for the LEAPS option upfront!
Alright guys, I hope you enjoyed this LEAPS Options Tutorial for Beginners. If you are a beginner and this sounded confusing do not worry. It did for me as well originally. We will be continuing to cover the details in future videos. We will continue to learn and succeed together.
I’ve put a link down below for the FREE Options Workshop. Be sure to grab that.
Remember to hit like and subscribe and leave a comment below with any questions and I’ll be sure to respond. Let me know what you are trading today and having success with.
Thanks for watching please share this video with a friend and see you in the next one!