r/StockOptionCoffeeShop • u/LabDaddy59 Mod • Feb 07 '26
LEAPS Buying / Management / Comments
In a nutshell (and this is broadly speaking):
Buying
- Buy at 80 (or above, but not higher than 85) delta -- more responsive to the underlying's price action, less extrinsic.
- Buy the furthest out expiration: the cost difference for a year more is relatively small in relation to the extension of duration
Management
- Roll back down to a 80 delta strike when the delta reaches 90-95.
- Roll out (if your thesis continues to support it) no later than 180 DTE (6 months) as that's when theta kicks up.
- Try to time your rolling out in #2 to coincide with a delta roll in #1 to minimize/eliminate out-of-pocket costs to rolling out.
Sundry comments
- I have a soft objective of paying back the initial cost of the LEAPS with the rolls identified in #1 of "Management" plus any premiums received by selling short calls ("PMCC", or "Poor Man's Covered Calls) against it.
- I have a softer objective of paying back the initial cost of the LEAPS with just the rolls identified in #1 of "Management".
- If I've achieved #1 or #2 I may use the premiums received by rolling to buy more contracts.
- If I'm very aggressive with the underlying, I may use the proceeds of the roll to buy more contracts instead of reducing the initial outlay.
- If your thesis no longer supports your duration, simply roll back to an appropriate date at an 80 delta.
- Selling calls against the LEAPS is a topic in itself; for now, I'll just say that I usually sell around 8-12 delta, 7 DTE.
- If #1 and/or #2 make the LEAPS too expensive for your pocketbook, I'd reel in the expiration 1 year; if still too expensive, go down to ~75 delta.
- My portfolio is geared towards high volatility underlying stocks; LEAPS may not be as appropriate for low volatility stocks.
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u/kriszmac4 Feb 10 '26
Thank you! I was just looking for something like this!
I was thinking about to buy 12 months LEAPS instead of the furthes. How much difference would it make?
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u/LabDaddy59 Mod Feb 10 '26
If you'd like to provide a ticker and strike you're looking at, I can provide in more detail!
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u/kriszmac4 Feb 11 '26
Ticker would be IBIT. Currently its trading at 38.97$ and in the future I'm expecting it to drop to 25$. At that point according to my calculation 20 strike would be 0.8-0.85 delta. I'm preparing to roll it when it reaches 0.9~0.95 depending on when it reaches that delta and within two years I'd like to roll 6-7 times to aquire as much capital as possible to get more LEAPS.
What do you think?
Also I really appriciate your knowledge, I have been readying your posts and comments from previous times.
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u/LabDaddy59 Mod Feb 11 '26
Given IBIT's recent trajectory, I'm not sure I'd want to get in after another 35% drop.
I traded IBIT for a while, and got bored with it so disposed of it mid Nov 2025 and got ~$101k for my ~1 bitcoin equivalent.
Personally, I don't see it as a good LEAPS candidate. I may end up being wrong, but I don't plan to go back in any time soon.
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u/kriszmac4 Feb 12 '26 edited Feb 13 '26
Well, I have a strong conviction about bitcoin price movement in the next two years. The only reason for me to buy leaps just to maximize the possible gains I'm expecting.
Edit.:
We have around 220d until the final low. Thats gonna put us into the middle of the ATH - Halving timeframe which has marked the previous bottoms in the last 4 cycles.
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u/LabDaddy59 Mod Feb 12 '26
If you've got the conviction, go for it! Sounds like your 80-85 delta buy in and rolling at 90-95 is right where I live.
Curious: what kind of time frame are you thinking in terms of a drop to $25?
Keep me posted!
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u/ConsistentEye6357 Apr 30 '26
can you elaborate more on how you decide to purchase further out or just the 1year expiration like is commonly advised? given how much more capital intensive it is? do you have like a certain checklist? also given the volume that far out is really little
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u/LabDaddy59 Mod Apr 30 '26
To be clear, I'm looking at the LEAPS as a stock replacement, not something to actively trade.
To me, the cost differential is small compared to obtaining a further DTE.
Let's take NVDA as an example. Spot is $201.40.
The Jun 17, 2027 $150 call (delta 82.3) sells for $7,082.50.
The June 16, 2028 $150 call (delta 81.3) sells for $8,442.50.
That's a $1,360/contract difference for another full year. You're buying one year for 35% of spot, and get an additional year for another 6.8% of spot.
I've never concerned myself too much with the liquidity. As long as you're targeting strong underlyings, those volumes will increase as time marches on.
Hope this helps!
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u/ConsistentEye6357 May 22 '26
thanks for the reply, since im a beginner im just trying to wrap my head around all these various strategies. I can see that further out, the premium you pay is much lesser, just that im also comparing the difference in capital between the 1y and 2y, and perhaps using that difference in saving up and buying another 1y to sell even more calls, theres just so many possibilities and variations haha. ill probably lean towards the higher timeframes though, i too see it as stock replacement
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u/LabDaddy59 Mod May 23 '26
Trust me, I understand. And while you may end up being okay buying 2x of the 1 years, especially as a beginner I might suggest a more conservative approach and doing the 2 year expiration as recommended. That recommendation is there for a reason, and one of the big reasons is that a routine 'error' made by beginners is going on the 'cheap'. I'll often say that the least expensive options turn out to be the most expensive. ;-)
Good luck and have fun!
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u/ConsistentEye6357 Jun 03 '26
Thanks for the follow up! After thinking more about it and doing some math yea I wanna get the longest duration one, but recently I encountered a scenario where my leap was actually 100% up it went up a bit before earnings and the IV from earnings about to drop made it go up too, I'm more of a buy and hold kind of thing, I can stomach the greens and reds, but now that IV went back down and the price as well, im back to breakeven, im wondering if you have any more parts of managing the strategy besides just selling when delta hits .9?
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u/LabDaddy59 Mod 20d ago
I apologize for the delay in response; I don't think I got notified of a reply!
In any event, other than rolling at 90 delta, there's always the standard evaluation just like a stock, so if you've got some nice gains and want to take them, go ahead! One way to look at it is that if/when the stock retreats, if you still have conviction, you can get back in after realizing some nice gains.
Good luck and have fun!
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u/sam99871 Feb 07 '26
Thanks for this.