Instead of buying shares…
If you buy shares of growth stocks that you’re bullish on, you should know about this alternative of buying LEAPS.

LEAPS are long term equity anticipation securities.

You can buy these options with an expiration date up to 3 years out. LEAPS can provide huge returns but they can also result in huge losses. LEAPS should be used when you think a stock will be worth more in the future.

When buying LEAPS, you do not need as much capital as if you were buying shares of stock.
Cayden's avatar
In theory during a strong bull market, yes. But THETA will eat that option if the market spins neutral or downward, along with the exponential loss if share prices compress
Sidni Standard's avatar
What companies are you interested in buying LEAPS for rn and why?
Yan Carlos Ospina's avatar
@sidnistandard $JOBY $LILM bullish on the concept of flying taxis. $NIO luxury electric vehicles $SBUX trading at a discount. $CHPT electric vehicle batteries $AMC high risk, high volatility, big profit potential $BAC trading at a discount, solid company
Reasonable Yield's avatar
I vowed never to touch derivatives again.
Yan Carlos Ospina's avatar
@reasonableyield they’re definitely more risky. It takes a lot of knowledge and practice to trade them. The safest strategy is covered calls once you own 100 shares of a stock. I also like leaps because I don’t have to buy a lot of shares if I’m bullish and can still get a good profit.
Vincent Poy's avatar
The thing with options or anything that trades with contracts is that there is a expiration date and you basically have to be good at predictions.
Joey Hirendernath's avatar
What is the best way to mitigate risk with such a play ?
Yan Carlos Ospina's avatar
@joeyhirendernath you can use a strike price that’s equal to the current price, and use a stop loss or trailing stop loss, and buy the call that’s furthest out (1-3 years till expiration). You can close it whenever you reach your desired profit
Rihard Jarc's avatar
Interesting to see someone talk about LEAPS on this platform. Although I would be very careful with them, the risk is much higher and probably not for most investors.
Yan Carlos Ospina's avatar
@rihardjarc I would use a stop loss order to manage risk