LEAP Options for BIG Gains 2021

what's up everybody so welcome back today i want to talk about leap options and it's just basically a great way to if you're bullish on a stock but you don't want to pay as much for the stock and also don't really allow for greater just just massive uh returns then you can try and you know something called a leap option okay so the leap option just to give you an idea of how it works and it's basically you're buying a call option but you're buying a call option that expires as as way out as you can okay so sometimes people buy call options that are more short term and in my opinion those are a little more risky because of simply the fact that your option can decay and you know if you're if you don't allow enough time to go up then you know that that option may expire worthless okay so uh you know before i begin and before i continue if you do like my content all i ask is that you like this video and you subscribe uh give it some love this really helps the channel okay so without further ado the way leap options work is uh first you want to find a company that you are bullish on okay so a company that you know you can take a look at their fundamentals you can take a look at their uh you know just a lot of different stock earnings you can take a look at what people are saying about it a lot of different indicators obviously you can take a look through you know stock screeners and all that but if you're bullish on a company and you don't want to buy the stock outright you can do something called a leap option so i'm going to take an example of a stock ticker pltr palantir because it's actually a company that i'm looking into buying a leap option probably by next week okay so palantir is a company that is well we'll talk about the company and what it is later on but let me show you how a leap option works first okay so uh so right now palantir is trading at 26.69 okay if i want to buy a hundred shares of pounds here it would cost me almost twenty seven hundred dollars right two hundred six two thousand six hundred dollars and seventy dollars two thousand six hundred and seventy dollars right but instead of buying outright a hundred shares what i can do is buy a leap option so what i would do is i would go into my broker's account and one thing to know is i'm using robinhood just as an example i don't really trade most of the time on robinhood but robin hood actually has a really great interface they made it so easy perhaps a little too easy for everyday people like you and i to not only trade stocks but to look at options and look at all the different uh you know the deltas and all that and a lot of other helpful information that you know most people just typically won't even bother to take a look at if they're using another platform but so i'm using robinhood today and what i'm going to do is i'm going to set my expiration date first you always want to do that i've made the mistake of setting that not setting the expiration date and you know that's just a big mistake you don't want to do so you want to set the expiration date today and i'm going to go way out okay so i'm going to go all the way out to january 20 20 23 the farthest i can go and this just really allows volunteer a lot of plenty of time to go up right yes the premium is gonna be more expensive but uh in my opinion uh you know it just gives a lot more time for the stock to come into fruition and on top of that too uh you can definitely still sell your call option whenever right you don't have to wait till 2023 uh you know that's just something that i prefer to allow more time for this play to to come to fruition okay so uh so i'm gonna buy a call option and i'm gonna go deep into the money okay so yes you can buy stocks up here where you know you're betting that the stock uh can will go okay so so let me let me explain what a call option is right so one call option is basically one contract that allows you to buy a hundred shares at a later price uh sorry at a later date on a set strike price so for example uh yeah yes you can buy a call option of a pound tier for uh at 35 on january 20 2023 uh and you would pay a premium of 418 all right so on january 2023 you can buy a hundred shares a pound here for 35 dollars and right now you would have to pay 418. so the stock goes up above 35 then you would be making a profit okay well that would actually be you know a little more than that because you have to take into account the premium you paid as well okay so uh i i'm gonna you know go deep into the money because i think it's just a much safer play and that's essentially what a leap option is as you buy deep into the money and then you want to take a look at the delta okay so the delta just tells you how closely this option will mimic the price change of the stock so let's say for example uh you know if you buy a pallenteer option with a delta of 0.96 for every dollar that pound tier goes up uh this stock option is going to move up 0.96 so 96 cents as well okay and the reason why you want to have a delta that is close to one and one that just mimics the stock movement pretty closely is because it gives you just the option of selling covered calls later on and i just think it's a pretty good way to earn some income if you're essentially buying a stock option that mimics um it's almost like you're having 100 shares of a stock okay so i'm taking a look at you know for january 2023 a strike price of i think maybe okay probably most likely probably just uh 15 okay 15 or maybe 12.5 okay so yeah so the delta is 0.92 uh so so today i'm gonna have to pay a premium of uh fifteen hundred dollars but you know you know that that essentially will pay off if the stock goes up a couple percentages okay so uh that's that's essentially how a leave option works so you buy a call option long with a long expiration deep into the money and uh okay so you know palantir is just one of the companies i'm taking a look at the other two companies i'm going to be probably buying or at least considering heavily considering buying is sumo okay so oh well before i you know talk about sumo i forgot to talk about palantir so palantir uh is an american software company that specializes in big data analytics it's headquartered in denver colorado it's essentially it's founded by peter thiel so just a really huge investor in paypal and all these big companies um they stephen cohen so it's backed by a lot of you know really big time uh entrepreneurs who started just huge companies and on top of that what i like about volunteers they have a huge amount of government contracts there's just so much in the pipeline for kathy wood has been invested heavily into it and so i think it's really going to go up and then sumo stock is another company cloud-based machine data analytics it's uh it was founded in 2010 they have 800 employees a lot of great things in the pipeline for sumo um they've actually been down the last couple months so i think this is a great buying opportunity especially for leap options and the last company that i'm taking a look at this is a lot more risky because it's a biotechnology company uh you know with with these there's not a lot of revenue and you know you just kind of have to uh you know hope that whatever they're developing comes into you know just just passes the fda approval and all that but i do think uh as like as a theorist a therapist inc aths i think they have a lot of great products in the pipeline as well uh you know therapies that are really designed to enhance the quality of human life um and and i'm all about that right i really believe in furthering uh humankind especially by researching and finding just really important therapies for diseases and all these things are going on in the world so but on top of that you also want to make sure you do look at some fundamentals and i think a lot of people are saying that this company has just a lot of great things in in in their in their near-term future or in their long-term future really and so that's something i'm taking a look at that the stock is pretty cheap right now that dollar 68 and uh yeah but again you know this really just covers uh you know briefly over what leap options are and a couple of companies on the left-hand look at i think there's actually there are actually quite a few other companies honestly i'm prospecting for leap options but these are just initially the first three that i'm going to take a look at okay i hope that's helpful for you if you like this content again please give me a like and subscribe and until next time i will see you then

Channel: EagleStreamInvesting

Views: 480

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Id: gZC1S993GJ8

Length: 10min 25sec (625 seconds)

Published: Sat Sep 04 2021