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HOW I INVESTED 1 MILLION WITH OPTIONS:
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Today's Robinhood Investing Strategy:
Understanding LEAPS Options – LEAPS stands for Long-Term Equity Anticipation Securities. LEAPS are generally considered any options contract with an expiration date longer than 1 year. The idea of investing in LEAPS is to allow investors like you and me to benefit from the underlying stock movements while using LESS capital than if you were just buying the SHARES. One option contract represents 100 shares of the company you invest in. Using options contracts to control 100 shares (instead of buying shares) can lower your starting capital when investing.
Understanding DELTA in Options – The purpose of using Greek Delta is to lower your risk when using options. Delta is defined as the expected change in an option price relative to 1 movements in the underlying stock price. So Delta will help us determine how the option price will move. You will notice that delta values go from 0 to 1 on calls. For example, if we have an option with a delta of 0.25, then for every 1 the stock price moves, the OPTIONS price will increase by 0.25 cents. If we have a delta of 0.75, for every 1 the stock moves, the option price will increase by 0.75 cents. And going to a delta of 1 means that for every 1 the stock price moves, the option price will increase by 1 – and THIS means that when you have a delta of 1, it will equate to the same moves as owning 100 shares of the shares. So if we want to MIRROR our investment of 100 shares in a company that uses options, we want to buy a call option with a delta of 1 or as close to 1 as possible. To achieve that we generally want safe ITM buy options that expire in more than one year.
So to summarize, if you want to reflect your investments you've already made in 100 stocks of your favorite company, use ITM LEAPS call options with a delta of 1 and you should be good to go.
NOTE: I am not a financial advisor – none of the videos above are intended as investment advice. I only show MY own strategy and my investments should not be tried and duplicated solely based on the information in this video due to the risk of losing money.
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