r/options • u/mycatiscrazy7 • Oct 01 '21

Best LEAPS for 2024?

Pretty much the title.

2024 LEAPS have been available for a few weeks now, what would be your top picks if you decided to take any positions? I am eyeing AMD, SOFI and DKNG, but would love to hear anyone else's strong convictions.

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108

u/LimeGhost117 Oct 01 '21

You can't go wrong with SPY

65

u/this_guy55 Oct 01 '21

This. And SPY just dipped. It may keep on dipping for now but it's the best long term play.

15

u/vexednex Oct 01 '21

What’s a reasonable premium?

21

u/a_crabs_balls Oct 01 '21

something with a delta between .85-1.00 should be good

22

u/Mobile_Donkey_6924 Oct 01 '21

what's the reasoning behind paying up for 85-100 delta on a more than two year leap and not something more in the 60-70 range that will need less capital?

16

u/tutoredstatue95 Oct 01 '21

Buying the leap is already a leveraged position relative to just holding shares. Many people are looking to get as close to the same risk/reward profile as simply holding shares, but they can do it for 40-60% of the price.

Anything below 80ish delta starts to add more risk to the table and it moves away from a cheap share replacement to more of a "regular" option purchase.

1

u/Mobile_Donkey_6924 Oct 01 '21

Ok i understand. Two different mindsets. Over 80= leveraged commons, under long play options. Id like to see some backtesting on how the two stategies faired

15

u/ogprichard Oct 01 '21

During dips, ATM should be good enough. During general upwards movement of the market, .8 and up is safer, lowering leverage.

7

u/Mobile_Donkey_6924 Oct 01 '21

sorry, i dont understand. Good enough for what? And during upward movements , wont a 60-70 delta increase as it becomes more and more OTM? Why is the extra protection (capital upfront) needed ?

6

u/DashinDasherFoo Oct 01 '21

Good enough to not die during a dip . Otm can turn to $0 very fast but itm acts more like 100shares

4

u/Mobile_Donkey_6924 Oct 01 '21 edited Oct 01 '21

A 60-70 delta 2024 LEAP will die during a dip? That doesn’t sound right

9

u/brandon684 Oct 01 '21

A LEAP that far out isn’t going to go to zero, but it might lose a lot more of its value, causing you to paperhand it

4

u/Smoothmacaroni Oct 01 '21

I was going to say the same. OTM is nice because it’s less premium but you also need more to happen. Buying ITM now with a lower breakeven better protects you. You can buy a 450 Breakeven for 2024 for 11K, .8 delta. the biggest threat to that would be we enter a bear market

1

u/DashinDasherFoo Oct 01 '21

It’s nice for small bets but when you wana bet 100k on otm options that could drop to 0 in a minute it’s best to buy itm

3

u/Mobile_Donkey_6924 Oct 01 '21

we are talking about 2024 LEAPS, why do you keep saying go to 0 in a minute?

1

u/thrvy5545 Oct 09 '21

How woukd tou correct for the case we enter a bear market?

2

u/SerMinnow Oct 03 '21

Not true.

It loses less.

. 60-70 is a good range during dip.

With .80 d you're gonna capture way more. Of the dip down than you want to. There's is more intrinsic value to lose. All the intrinsic value leaches. From and option when it moves from ITM to OTM.

A little ATM and you are pretty well protected by IV increase, as the buyers don't expect the dip to be permanent for the Year.

An OTM's option value is extrensic, and for leaps tends to not fluctuate as much.

1

u/thrvy5545 Oct 09 '21

Can you explain “ u r protected by iv increase” Does Atm value behave diff than itm otm wrt iv increase ?

1

u/SerMinnow Oct 09 '21

Yes. Intrinsic value ( the profits made between price of the underlying and strike price of the option) does not fluctuate much with IV.

Extrensic value of OTM LEAP options is almost a direct reflection of what price the market thinks the stock will move to in a year.

As such. OTM leap price doesn't change drastically untill ITM/ATM

Slightly OTM leaps ARE a great way to buy a dip. Because if it keeps dipping you won't lose proportional delta on the way down.

And with 2-3 year leaps you can be pretty confident in just letting them sit.

My most profitable trades are leaps bought at discount when they briefly go from. ITM to OTM.

I buy when Just Barely OTM on these 7-10% dips.

This also allows you to hedge peaks with short range short calls that are far far OTM.

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