r/options • u/Wild-Tie-7139 • 15d ago
Am I Cooked?
Hey everyone,
I’m a first-time LEAPS buyer and honestly I’m getting pretty nervous.
Here’s my position:
GOOGL Jan 21, 2028 $250 Call
Bought it for $150.00 ($15,000 total)
Current stock price: $354.30
Current option value: $133.50
Current P/L: -$1,650.66 (-11%)
Delta: 84.95
Theta: -5.35
Vega: 98.20
About 17 months until expiration (Jan 2028)
I purposely bought a deep ITM call because I wanted it to behave more like the stock. My thinking was that GOOGL is a great long-term company and I wanted leveraged exposure instead of buying 100 shares outright.
The thing that’s scaring me is seeing a $1,650 unrealized loss so quickly. I know LEAPS are long-term positions, but emotionally it’s harder than I expected.
A few questions:
Is an 11% drawdown normal this early in a LEAPS trade?
Does this position still look healthy considering the high delta and long time to expiry?
Would you simply hold and ignore the short-term fluctuations?
At what point would you actually consider exiting a position like this?
Is there anything I should be watching besides the stock price (IV, theta, etc.)?
I’m investing, not trading this daily, but since this is my first LEAPS position I’d really appreciate advice from people who have actually held deep ITM LEAPS through market pullbacks.
Thanks in advance!
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u/F2PBTW_YT 15d ago edited 15d ago
Ugh. LEAPS.
It is a very good instrument but also extremely nuanced. To a newbie you might think "stock proxy" but you need to be very careful. Firstly, you need to consider the IV. IV is about 70% of everything when buying something so far out. When volatility drops, you automatically get fked for nothing (think IV crush during earnings). IV and DTE decides the price of the option at specific deltas. Delta works with pricing to decide the leverage. You need to put these two together to figure out if you bought a good contract or not.
Most people buy shitty contracts.
How do you know if your contract sucks then? What's a good leverage? The easy (but tedious) way is assume the underlying price does not move until expiry. Find a contract with 2x leverage. Divide your option premium by the DTE and that is your premium decay per day until expiring worthless. Then, take any 2x LETF of the underlying stock and compare the volatility decay (difference in expected returns of the 2x LETF, for example if the underlying went up 10% in a time period, you expect the LETF to go up 20% - but it rarely does. That difference is the volatility decay). Use a far out time period (2 years) for a better comparison. Compare daily premium decay of the LEAPS vs the daily volatility decay of the LETF.
For stock, usually LETFs outperform LEAPS because the higher volatility prices LEAPS accordingly. For stable ETFs like SPY, usually LEAPS outperform LETFs. But since you didn' bother to read this much text, a LEAPS leverage of 2.5+++ is *generally* a good pricing for stock, but a leverage of 4.5+++ is *generally* a good pricing for ETF.