Reply To: SPY Options – Buying & Rolling

[George Henry]

What Are the Key Points to Profitable LEAPS Calls?

When buying LEAPS Call options, we want to choose deep ITM, 0.90 delta, strike prices to increase our probability of profit. We also want to have more than 1 year to expiration to give the stock enough time to make the Call profitable.

Let’s compare deep ITM and ATM LEAPS Call options to see the impact of different deltas. Even though the 0.90 delta Call requires more buying power, the higher delta makes the option’s value follow more closely with the stock price movement. The lower strike price also gives us more room to profit and a better breakeven price.

Source

What are LEAPS Calls and How Do They Work?