use LEAPS options strategy in uncertain time
In this uncertain times, I used options to help build risk resistance in my portfolio. Mainly using LEAPS (deep ITM CALL options expiring in 1 to 2 years). This is because LEAPS give me downside protection while allowing me to part take in the long term growth of the company. The downside is that I have to pay a premium for the downside protection.
So for example, assume current price of ABC is $40. If you are bullish on ABC in the long term, you can buy a CALL option expiring in 2024 with a strike price of $20 that cost $21 ($1 is premium, $20 is intrinsic value).
If ABC manage to survive and thrive, you will earn money as though you bought the shares at $41. If ABC price crash to $0, well you only lose $21 max. Using LEAPS, it give you 2 years for the stock to ride out the wave, and protect you in case it crash and burn.
So for example, assume current price of ABC is $40. If you are bullish on ABC in the long term, you can buy a CALL option expiring in 2024 with a strike price of $20 that cost $21 ($1 is premium, $20 is intrinsic value).
If ABC manage to survive and thrive, you will earn money as though you bought the shares at $41. If ABC price crash to $0, well you only lose $21 max. Using LEAPS, it give you 2 years for the stock to ride out the wave, and protect you in case it crash and burn.
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toomanyscammers : How regular do I have to pay the premium ? One-off or yearly? This strategy sounds like something to be explored further....haven’t bought options before actually, other than paper trading. How do I do what you just mentioned?
doctorpot1OP toomanyscammers: It is one off because it is just buying a CALL option. You can learn more here: https://youtu.be/8FNTfJ7Usy4
toomanyscammers : thx. I've saved ur post for future read lol
toomanyscammers : now abit no mood yet to watch long video
but will watch when am keen to learn abt this. thank you for the resources too docpot