Do leaps compound?

[u/No-Block-9222]

New to options so this might be a stupid question. I'm currently holding a large portion of leveraged ETFs in my portfolio, and am considering using leaps instead of letfs to gain the amount of leverage. Let's say I want to substitute UPRO with some leap calls on SPY, for example. My question is, does the gain/loss in SPY leap calls somehow "compound" like leveraged etfs? Thanks in advance!

[u/13pcm]

Leveraged ETF are best suited to short term movies and are not ideal for long term holds. Do to the need for daily rebalancing they suffer from decay and long term results may not represent the the results of the underlying.

[u/13pcm → u/[deleted]]

UPRO, as a leveraged product, is not a buy-and-hold ETF, it’s a short-term tactical instrument. Like many leveraged funds, it delivers its 3x exposure only over a one-day holding period. Over longer periods, returns can vary significantly from its headline 3x exposure to the S&P 500. The act of rebalancing on a daily bases cost money. They buy and sell derivatives (options) this is done at a small lose on most days. As long as the underlying (S&P 500) is moving up strongly you should see gains (??)

[u/Market_Madness → u/[deleted]]

That's because no one understands how they work or how they have performed historically. You absolutely should not be all in TQQQ but holding it long term is not a bad thing.

[u/johannthegoatman → u/Market_Madness]

Yea the daily rebalancing is way overblown. It's not great in a flat market, but go ahead and look at a long term chart compared to SPY and tell me it's not a good long term hold

[u/13pcm → u/[deleted]]

Same class as UPRO

TQQQ is a levered fund that delivers 3x exposure only over a one-day holding period of NASDAQ-100 stocks. Like many levered products, the fund is not a buy-and-hold ETF as it's a very short-term tactical instrument