Stock Options Trading: How to Trade LEAPS and Why They Matter

#OptionsTrading #LEAPS #TeslaLeaps #ILMN #LEAPSTrading #OptionStrategies
DISCLAIMER: InvestAnswers does not provide financial, investment, tax, or legal advice. None of the content on the InvestAnswers channels is financial, investment, tax, or legal advice and should not be taken as such; the content is intended only for educational and entertainment purposes. InvestAnswers (James) shares some of his trades as learning examples but they are only relevant to his specific portfolio allocation, risk tolerance & financial expertise, may not constitute a comprehensive or complete discussion of such topics, and should not be emulated. The content of this video is solely the opinion(s) of the speaker who is not a licensed financial advisor or registered investment advisor. Trading equities or cryptocurrencies poses considerable risk of loss. Kindly use your judgment and do your own research at all times. You are solely responsible for your own financial, investing, and trading decisions.

TIMESTAMPS:
0:00 Introduction
0:30 LEAPS
0:40 Disclaimer and 1.2 Million Views
1:00 LEAPS Advantages Time Stability Leverage Great returns (when you back a winner!)
1:35 LEAPS Defined LEAPS are publicly traded options contracts with expiration dates more 1 year and out, up to 3 years from issue Identical to other options, except with longer times until expiration. Typically traded on stable well traded stocks, ETFs and indexes
2:35 LEAPS Defined
3:00 Short Term Calls vs Leaps Think of rent per month - ie time value. Short-term calls are like renting 5-star hotel rooms at $1000 a night. LEAPS are like buying a house and paying 2.5% mtg interest ie borrow $500K
4:15 LEAP Math My $TSLA LEAP Buy - story of the X! 9,000% return
7:00 Terminology:ATM, ITM, OTM A call option is in the money (ITM) if the market price is above the strike price. A put option is in the money if the market price is below the strike price. An option can also be out of the money (OTM) or at the money (ATM).
8:00 The Greeks Sensitivity of option’s price to changes in the value of underlying security - Delta Rate of time decay of an option - Theta Rate of change of Delta relative to change of price of underlying security - Gamma Option’s sensitivity volatility -ie Vega Vix Sensitive the price of the option is relative to interest rates - Rho
8:24 ILMN Play - bought the $300 LEAPS for $90. BEP $390 Now DELTA is $87 per $ move in price Buy in the money leaps DELTA Secret on Patreon Theta is the loss per day in $ of Time Decay
9:35 LEAPS Rules and What to Watch For
10:00 When to Buy? If you are thinking about buying LEAPS, you may want to do so when implied volatility is relatively low - Vega. Sell when Vega is high Note Rho (an options' sensitivity to a change in interest rates) is no longer important!
10:40 Long Term Outlook Takeaways: Needs to be bullish Find the bottoms Identify the range
11:30 Make a Thesis eg $1T MktCap
11:50 Risk Stock options are always RISKY if you do not know what you are doing. You can structure your investment with LEAPS if you're bullish on a particular stock. A rise of 50% could translate into a 300% gain, but this strategy comes with risks and the odds are stacked against you - you against the machine. Remember the rules I shared!
12:30 Watch Open Interest Need volume to trade.
13:00 Limit Orders Only - Sometimes LEAPS can have big spread between bid and ask.
14:00 Taxes When LEAPs are sold at a profit, the gain is taxable.
15:00 How I Operate
16:00 ILMN Simple Math Remember the Delta is key Time decay is gradual
17:00 Time Decay

[Mybodylife]

Brilliant video, well explained, you get heaps of views because your vids are quality.very nice.

[chadada]

It’s nice coming back and watching some of the older videos! I’m glad James starting making videos daily, this man has changed my life.. I’m blessed to be part of the IA patreon. The trade alerts and market updates are priceless..

[MarcusFred-wniv]

While trying to build passive income and prepare for retirement, It’s important to choose stocks that are expected to hold up in inflationary environments. To combat the negative effect of inflation, it’s a good idea to diversify your portfolio across different asset classes, such as stocks, bonds, and real estate, since this can help protect your portfolio against inflation. I have seen people making up to $800k in a month during high-inflation

[cjnow]

The definition of LEAP is what you're doing with the Youtube Algorythm :-) Crushing it on the SUBS!!! Stoked for you.

[Garce]

I am just watching it today. Proof James is a perennial . Quality never fades.

[FinancialToolBuilder]

This is the first video that I don't watch at 2X speed on youtube in 2 years.
Very interesting. Keep up the good work.

[livinginthehudsonvalley]

Love your chill style on all the topics you cover... Thanks for that in a sea of over-hyped content

[adamo]

You are such a great investor and teacher lol. Thank you.

[iQeLabs]

Glad I got served up this oldie but a goodie

[CebiGreen]

Omg. I had tried to learn option from other channels and I was so confused until I learned from this one. Glad that someone asked you about the option trading book during your live today and you referred to these series. Thank you!

[Vinosity]

I subbed to the channel last week, and the amount of information is incredible. Trying to be a SPONGE for all this POWERFUL wisdom you are putting out into the world. Thank you for being the teacher that the youth of today need. I wish I learned any of this stuff in school.

[jjnn]

@12:52 you talk about options that are well traded, at what point would you consider them well traded? In the triple digits?

[liming]

you are so generous to provide such good information and teaching here for free. I am so glad I found your channel

[aggerleejones]

Good video… Another thing I will do when I buy leaps is sell shorter dated options against them to lower my cost basis… Thanks and if my leap options are in the money I’ll scalp Gamma by shoring 😊shares of the stock. For example, if I have 5 call leaps in the money im essentially controlling 500 shares, if the stock makes a move higher maybe I’ll short 100 shares, now I control 400 shares Normally over time and I will cover and scalp some money without ever touching my options… and if the stock makes that move and never dips back down for me to cover then I’m still hypothetically long 400 shares

[GalaxyIV]

Wow! What great videos you have, and I don't usually comment on youtube videos... I will purchase your Patreon subscription without a doubt (even if I don't use it) just to support this channel! Great work man keep the videos coming, this information is a blessing to new traders.

[aaron]

Hahaha! Yeah, I'll be sure to get right on buying a LEAPS on ARKK because I desperately want to be broke.

[sidbizusa]

Thank you very much. I wish you were my investor. Straight to the point. I am telling my friends to subscribe to your chanell. Best wishes, stay strong and healthy!

[justinallen]

just wow!! thank you for fully explaining it, in very great detail. im bilingual, the way you explain it made it so understandable. thank you as always james

[mariaelenasandoval]

We enjoy your passion for investing as well as your wellingness to share with us
Thanks

[pm]

At your intro, are you saying “Welcome in” in English or the word welcome in another language which often has additional letters in other languages?

What’s your opinion on buying LEAPS two years or longer, then selling short term covered calls after the first year to generate cash flow along the way? Porter