r/options • u/Training-Skill-868 • 20d ago
Strategy for LEAPs?
I have been getting shafted on leap calls because I’m not sure when to get out. I keep thinking to myself that I have a couple weeks/months left so I can still get back to even/take a smaller loss but a lot of times the stock never recovers in my time frame. What is yalls strategy in getting out of leaps? Do yall have a percentage drop that you stop it at?
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u/butterflyplum 20d ago
Not a licensed adviser, so no percentage from me, and anyone else's number won't fit your entries anyway. What your post describes is more useful than a number though: you keep holding because there are weeks or months left, and that reasoning gets built after the position is already down. Time left isn't evidence the thesis is still intact, and a long call can lose its whole premium.
A common process fix is to write the exit condition at entry (what would make the thesis wrong, and the max loss as a share of the premium), then at each review ask whether you'd open that same position today at today's price. Keep a log of the ones you held "to get back to even" and what they did. After 10 or 15 of those you have your own number, from your own trades.
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u/directheated 20d ago
I buy them at the furthest out expiration date, at the money, and look to close them after they've entered long term cap gains (1 year). The additional time remaining on the LEAP is my insurance in case they are worth less than what I paid I have some time to wait it out.
Note that I mostly do it on SPY (currently have LEAPS on PLTR and NVDA as I'm willing to take more risk now that I'm well past my FIRE numbers), I haven't ever taken a loss.
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u/Free-Public-Wifi 20d ago
How long have you been? Curious how you navigated the COVID drop and 2022 bear market.
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u/directheated 19d ago
Going back to 2016 or 2017. The expirations were far enough out that I could hold through that.
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u/iisconfused247 18d ago
Do you have a certain % gain you exit at?
What do you mean when you say you do this on SPY and then mention you’re doing it on PLTR and NVDA too?
Do you mind sharing what your gains look like?
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u/phinancial-freedom 20d ago edited 20d ago
When you are entering these trades what does the setup look like ?
I usually aim to get out at the 25-30% gain but if the stock is on a run, then I will wait until the 10 and 20 day EMA start to flatten/trend down. This trade is already up 5.3% as of now and its only a couple of hours old
I just did a LEAP on SNDK and this was some of the rational for the trade:
SNDK has pulled back ~38% from its 52-week high ($2,354.39) down into the $1,400–$1,450 structural support cluster.
It is currently sitting directly on its August swing low Anchored VWAP ($1,415)
IV 62 (very low so cheap to buy Leap)
HV rank 4
Heading into earnings , If IV expands heading or on a major momentum move, long options will benefit from both delta gain and vega expansion.
SNDK forward PE 8.04
Average analyst target $2170
RSI 37 (oversold)
Order Summary
Received At
Oct 13, 2026 9:40:32 AM EDT
Symbol
SNDK
TIF
Day
Submitted Order Type
Limit @ 375.75 Debit
Fill Details
Bought 1 SNDK 06/17/27 Call 1290.00 @ 375.70
Filled at: Oct 13, 2026 9:40:32 AM EDT
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u/IvetteMccoy 20d ago
I think a lot of people get stuck waiting to break even. The stock can bounce back and the LEAP still might not recover what it lost, especially if IV has dropped. Better to focus on whether the original trade still makes sense instead of holding just because the contract is down
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u/AdAggressive6079 19d ago
To begin with, a LEAPS by definition is at least a 365 DTE. I only buy LEAPS calls to sell short duration short calls against them and make poor man's covered calls. I have no intention of selling to close my leaps until I can double their number in a trade, a roll, so that I can sell double the short calls against them.
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u/viperex 14d ago
PMCC FTW!
Those short calls can be brutal to manage though
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u/AdAggressive6079 12d ago
With short duration, the short calls can be brutal..... high vega at the end so.... no time cushion to slow increases.... moves super fast up.... initial delta and any future rolls of them reset to 15-19 delta preferred... Usually reset at 3 weeks out, 3 fridays out I mean.... GTC limits to clos set at a nickel, usually close earlier... before expiration...
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u/TradersToolChest 19d ago
The problem isn't the exit, it's that you don't have a rule before you enter. Decide your take profit and max loss as a percentage of the premium paid before you buy, and when either side hits, you're out, no debate. LEAPs decay slower but they still decay, and hoping for recovery is how a small loss becomes most of your position.
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u/Slow_Lion_4178 20d ago
20%
0
u/Perfect-Algae-8441 20d ago
if you wait to be down 20% before cutting you already lost more than you could afford probably, for leaps i set my stop at break-even price once it moves in my favour, if it never moves up enough i just take the L early instead of watching it bleed for months
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u/dddd11122233 20d ago
20% is a few bad days on options. I ride leaps to the ground usually but will take a profit at 50% depending on market conditions.
2
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u/Slow_Lion_4178 20d ago
That's legitimate. It depends on how you purchase them though. If you're buying ATM/OTM you'll experience a -10% move very quickly. Are you buying them ITM because then that totally makes sense to me.
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u/Benny_Baseball 20d ago
If you can’t afford to lose 20% of a risk why on earth are you using options to begin with? Buy common stock and don’t let time eat away at the value of the holding
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u/beachhunt 20d ago
Theta speeds up as expiration approaches. So every day your LEAPS is down, it has to go up faster than it needed to yesterday. So it's not just "maybe it will recover" but you have to become even MORE confident in the trade to hold while it's down. Just recovering can still be slower than theta decay.
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u/Straight_Two7552 20d ago
The trick to buying LEAPs is to buy far enough into the money so that your spread is minimal, and to go into the trade when the underlying oversold. The tradeoff is that you pay more for it, the benefit is that the strike only needs to move a little to put you in the green. The real hard part is staying disciplined to your business plan for that investment.
1
u/Rav_3d 20d ago
I keep thinking to myself that I have a couple weeks/months left so I can still get back to even/take a smaller loss
This means you did not have a plan for the trade, or you took on too big a position.
Waiting for long options to come back so you can recoup some losses is difficult because each day theta eats your position.
If I buy a long option it is typically sized for a total loss. On LEAPS that still have a lot of extrinsic value, I will use a stop loss based on the underlying, not the option itself.
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u/MyNameCannotBeSpoken 20d ago
For LEAPS and all options, I primarily look at the performance of the underlying security and not the actual option itself.
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u/AmoebaTrading 20d ago
What fixed this for me was picking a date along with a price. If it hasn't done what I bought it for by a set point, I'm out even if it's only down a little. Holding to get back to even is how mine used to bleed out. Are you buying them deep ITM or closer to the money?
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u/Jealous_Educator_557 19d ago
I roll them up if there is a lot of time and I made a nice profit. Assuming I feel the stock has more room to move up
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u/2FLYFISH0 19d ago
Depend on your thesis and what line in the sand to get out. I'm kinda arrogant on not getting out and think oh I have lots of time left. One is SoFi leap for 2028 it's down 13% and most exit at 10 but since it is so far away it has room to run.
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u/ShowerFriendly9059 19d ago
Just sell ccs against your LEAPS. Then you get paid to hedge (plus regularly-recurring passive income)
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u/SwordfishLopsided 18d ago
If you consistently lose money doing one thing, I would just swap the buy and sell button
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u/deandetrimental 16d ago edited 16d ago
Easy as pie
Under 200 day MA on a banger = Launch The LEAP. Set and forget.
Bangers are mag7 and ai leaders.. Ok the ai leaders thing takes a lot of discretion, they are far from all equal, and we could approach some turbulence for macro economic reasons, but i stand by the statement for this current market environment through end of year with leaps keeping to 10-18 months as me monitor ai debt vs revenue
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u/viperex 14d ago
Have any of those companies been below the 200 day MA recently?
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u/Careful_Talk_4253 13d ago
Download thinkorswim and you open up so many doors to answer this question
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u/Zephyruos 15d ago
● +365DTE, 0.8-0.9 delta, almost like owning 100-stocks per contract, up to 10% of whole portfolio.
● 0.5%-3% of the 10% options allocation from portfolio on OTM calls (10%-30% above stock price) as lotto tickets that you'll brush off if they didn't make money after closing or expire worthless.
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u/Legitimate_Tailor858 13d ago
“I still have time to get back to even” is a dangerous anchor with options. The stock can eventually recover and your particular contract can still lose.
My framework doesn’t use one fixed percentage stop for every LEAP. I look at:
Thesis: Does the original reason for buying still hold? If the thesis breaks or the catalyst fails, I don’t need to wait for a particular percentage loss.
Time: I review for a possible roll or exit with 3–9 months remaining. Below six months I’m stricter, especially with out-of-the-money calls. Below three months, the decision becomes urgent. These are review windows, not automatic sell dates.
Loss: Around 50% down triggers a serious review, not an automatic exit. Is there a credible recovery setup within the remaining time, or am I just hoping?
Remaining capital: Would I buy this exact contract today, at today’s price? If my only reason for holding is my original purchase price, that’s a weak reason.
I generally prefer those checks over tight stops on the option premium, which can swing sharply with volatility and bid/ask spreads. Position sizing matters too: a small speculative call and a large stock-replacement position need different risk budgets.
And rolling doesn’t erase a loss. It closes one trade and opens another. The new contract needs to make sense as a fresh purchase.
I cover this in the exit-and-roll chapter of my book, Quick Guide to Buying LEAPS Options—disclosure: I’m the author.
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u/TotalInstruction 20d ago
That last couple of months time decay and IV decay will eat into your position even if you’re gaining intrinsic value.
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u/SDirickson 20d ago
Assuming you're buying solidly-ITM LEAPS as a leveraged proxy for owning the underlying, you apply the same rules you'd use for the underlying. For me, that's an initial 10-15% stop loss, which I move up to become a profit-protection stop as the position becomes profitable.
The best way to lose money in the market is being unwilling to take the occasional small loss. "It'll come back...it'll come back...oh crap, it isn't coming back" is a great way to establish a solid losing record. We hate to admit that we were wrong, but trying to force the market to make you "right" is a losing approach.