What Are LEAPS in Options Trading? (How to Magnify Stock Returns)

Options traders mostly place trades with 30-60 days to expiration, but we are not limited to short-term trades. We can also place long-term options trades via LEAPS (Long-Term Equity Anticipation Securities).

In this video, I cover:

1) What are LEAPS in options trading?
2) What are the differences between short-term and long-term options.
3) How LEAPS can generate massive percentage gains relative to the stock price return over a period
4) Why implied volatility collapsing is not a huge concern when buying LEAPS call options.
5) Why LEAPS should be avoided on most stocks because of liquidity reasons (low open interest/volume).

I hope this video is helpful and you have a better understanding of how you can incorporate LEAPS in your portfolio, and especially if you have a strong directional prediction for a stock over the next year or so.

Be sure to leave a comment down below with any questions you may have!

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[projectfinance]

As always, let me know if you have any questions about the video.

-Chris

[xtctrader]

My biggest problem over the years when buying options (primarily Calls) is "timing". i.e. having option expire before stock moves. By using LEAPS with high Delta (deep in the money) I've become a lot more profitable.

[Lil_mar]

I started trading LEAPS last year. It's just so much easier not worry about the day to day while still leveraging options. Great video! I learned a bit more :)

[utsav.sarkar]

Best channel to learn Options trading! Great job man

[mtable]

You are an excellent teacher. This is the 3rd option video I've watched and you are very thorough and systematic. Thank you so much for sharing this content with us. Much respect!

[shayneedge]

Hey Chris, your videos are outstanding! Clear, thorough and applicable...I'm primarily buying LEAPs now and wanted to ask 2 questions...1. Do you have a recommended profit goal for when you might sell to close LEAPs and 2. What are the pros and cons associated with buying LEAPs on leveraged ETFs? Thank you for all you do, sir!

[jamesbeck]

This was extremely informative. I was thinking of doing leaps on a particular stock and now have a much better understanding of how it works. Thank you.

[raztamir]

I'm onsidering myself as a long term trader and options were always a mystery to me as it was mainly discussed around the short term/day trading.
this vid changed the minset and my pocket :)
Thanks a lot for sharing this!

[PeteBuchwald]

Idea: if i'm very bullish on the longterm, buy a leap, while selling a long-term put. Use the put premium to lower cost of buying the call, and lower my break-even price. I'm sure I'm not the first person to consider this combination. lol Thx for your content.

[mamumich]

I was lucky enough to buy XLE 2022 leaps right when it bottomed in mid March. So glad I did, now that the market is recovering.

[taniashivam]

is vertical spread good for leap options? example please

[shanemiller]

You’re always professional and thorough with your videos! Keep up the great work and I’m sure your portfolio is BANGIN!

[babaksadjadi]

Great channel to learn options with so much detail explanations. You are doing great, I recommended your channel to all people interested to learn options.
I am a bit puzzled that why deep in the money Leap call options have very little extrinsic value. This make it much less risky strategy. Can you please comment?

[mylzebatyahoocom]

this really cleared up a lot of confusion I had about the greeks, thanks!

[bballgtr]

Explaining is one thing - as in how to do it. More important though is WHY. What is the purpose of using LEAPS - when does it work well and when is it a bad choice. For example, I know how to initiate an Iron Condor (not saying I could even do it better than anyone but I can follow step by step). Why? That is always the big moment - "Oh, so that's why it works so well!" Thanks for your help and advice.

[joshuabrown]

It feels like you made this video for me :D
Excellent explanation as always. Thanks!

[SejalPatelDrSej]

Loved this but wish you would of went deep into the mechanism by which the 600 percent gain was effected through the Greeks as the underlying increased

[stevieb]

These are my type of options! Could you do a LEAPS strategy?

[jessiechimni]

Hi Chris - is there a relationship between Delta and IV? I have noticed that my profit projection using delta, once the stock moves up, are much lower that the theoretical (price increase*delta) projection that i have been doing. Hence I assume IV has a lot to do with the gap. I would appreciate your thoughts

[alexandracunha]

I just the way you teach us! Thank you 🙏🏼