Buying Leaps at Buying

Buying Leaps. Managing the leaps to wrap it up: I buy at the money leaps against indexes and hold them for their entire lifespan.

The goal here is to reap benefits similar to those you’d see if you owned the stock, while limiting the risks you’d face by having the stock in your portfolio. The reason traders buy leaps put options is to protect themselves against potential losses. You can sell a leap put to fund part of your long leap call purchase (depending on your risk tolerance/account size), but you’d essentially be doubling down on your bullish stance.

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But, since stock markets usually go up, you can use this to your advantage. Buy leaps at a longer expiration date while i believe that the stock prices of fundamentally good companies will eventually go up, they will go through cycles of up and down. You buy a leaps call with a strike price of $28. Here’s a method of using calls that might work for the beginning option trader: