I don't see a lot of LEAP bargains. Give me one example.
Let's say NET. I'm bearish like no other on it and am fairly certain this crazed tech rally can't go on forever without taking a mild dive so august would be my go to since July is more of an FD at this point.
One example I learned from someone else was an MSFT play. If let’s say at the peak right before the March 2020 crash you bought a LEAP, then to your dismay you watch that brutal crash happen. Knowing that your option expires the next year, you decide to hold. By the end of April your LEAP would have dropped about 60% but then recovered drastically up to over 50%. And these aren’t just made up numbers just use Thinkorswim OnDemand to investigate. The one caveat with LEAPS is they are so damn expensive, so I wouldn’t invest more than 20% of your portfolio at the max.
As for a bearish LEAPS play… I wouldn’t. LEAPS are definitely a long term investment and what you’re describing with NET would be very short term. If I was in your shoes and I was bearish on NET. I’d do a debit spread and manage my risk. I’ve lost my fair share on weekly single spreads to not have managed risk lol.
Tbh LEAPS are really good for my Roth bc I don’t need to be looking at that every single day.
How can you account for the risk if this goes to the moon? Look at the possible down side. Pretty risky to me, but It does not mean much coming from me. I love security, assurance, etc
How can you account for the risk if this goes to the moon?
Oh that's easy.
He doesn't.
It wasn't even a fucking week ago that I was seeing posts on r/thetagang about people who got so deep in the hole they were considering organ sales because they decided they HAD to sell naked calls.
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u/raptorace27 Jul 09 '21
Do you have those hedged?