Readers are always asking which newsletter they should follow. This short article explains why you should read the LEAPS Trader Newsletter.

The term LEAPS stands for Long-Term Equity Anticipation Securities. The term is normally abbreviated to just LEAP as in buy a LEAP option.

A LEAP option is just a regular call or put option that expires well into the future. A LEAP can have an expiration date up to two years into the future. While those long term LEAPs are available we rarely use those in the newsletter. Two years is a long time and very few people have that kind of patience.

With LEAPS as with any option, your risk is limited to the price you pay for the option. For instance Apple (AAPL) stock is $108 today. If I thought Apple shares would be well over $115 by January 2018 I could buy the $115 LEAP call for $9. The consensus estimate for Apple shares is $138. If Apple shares rose to $138 at any time before expiration in January 2018 you could sell that LEAP call and your profit is the difference between what you paid for it ($9) and what it was worth with Apple at $138, which would be in the range of $25. You invested $9 and that would make your profit $16 or roughly a 175% gain. You could sell the LEAP at any time. There is no requirement to wait until expiration. If Apple shares crashed, your total risk is $9 but we always maintain stop losses to prevent major losses.


In the LEAPS Trader newsletter we rarely buy options that far out. Typically we buy 6-9 months in advance, which is a regular option but with a long time frame. Using the same example with Apple at $108, we would buy a March $115 call for $4.50. That gives us up to 8 months but we would not hold the position that long. Most positions are only held for 3-4 months because nobody can predict stock and market movement 9-12 months in advance.

The same strategy would apply. If Apple shares moved over $115 at any time before March 2017 we could sell the call and take our profits. By using the shorter term option we simulate a short term LEAP by using a longer dated call option.

The LEAPS Trader newsletter is a very conservative investment strategy. We try not to be concerned over the short term fluctuations in a stock price and focus on the longer term trend. This is an excellent newsletter for people that do not spend every day looking at the market but still want to profit from the market moves.

We buy conservative stocks, preferably those that have experienced some kind of dip that reduces long term risk. We like stocks with low volatility so we can sleep at night.

When you use longer dated options on quality stocks you may find you are an owner of a stock that is suddenly being acquired. That is a bonus but we rarely buy in anticipation of that kind of event. We just buy LEAPS on quality stocks and watch them rise.

We apply multiple strategies to reduce risk and enhance profitability. Sometimes that means we will buy a short term put if there is a volatility event like an earnings report in the near future. We try not to exit ahead of earnings but sometimes bad things happen and we want to be protected. Sometimes we offer the option of selling a short put to offset the cost of an expensive call. This is just an option and is not required.

We try to maintain 15-20 positions across all sectors. We do not expect readers to own all those positions. We recommend readers only invest in the stocks they like when they read the play description. You may prefer tech stocks or biotechs and would rather avoid industrial stocks. We understand. It is your money. We simply try to give you a broad range of options.

While not all positions are always profitable, the longer-term nature of the newsletter allows us to spread the risk and let the profitable plays outweigh the losses. The following graphic was the actual portfolio from the July 10th newsletter. We are not representing that any reader captured all these gains but this was the actual portfolio status in that newsletter.


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Legal Stuff

The results posted for the LEAPS Trader are hypothetical. The performance numbers shown are based on trades subscribers could enter based on our guidelines. They are based on the price when the play was initiated by LEAPS Trader, and the price when dropped by the LEAPS Trader. LEAPSTrader.com cannot guarantee that any person bought or sold the actual security or option for the prices listed in the newsletter, or on the Web Site. The entry price listed in the newsletter and on the Web Site for the Leaps Portfolio is the option price at the time the stated entry criteria for the play is met. The exit price listed is the option price at the time the stated exit criteria for the play is met. In the event the play is entered or dropped by the newsletter without the entry/exit criteria being met the closing price for that day will be used. Investors may receive greater or lesser returns based on their trading experience, timing of trade entry/exit and market price fluctuations. The prices listed are for reference only and are in no way intended to represent an actual trade, entry price or exit price.