The Power of LEAPS

Back on December 2, 2019 I bought 10 contracts of the Walmart (WMT) 1/21/22 $120 Calls. This is a LEAPS. A LEAPS is an option with over a year before expiration. This particular option had 2 years before expiration. With WMT stock at $118, at the time, I paid a premium of $13.50. On the 10 contracts, or 1000 shares, the total premium was $13,500. I held this position through the coronavirus collapse and I decided to sell it today, still making a great profit. The stock wasn’t up today with the market but the stock was at $125, close to it’s all time high. With yesterday and today’s up days I don’t think the market will stay up. We are still no where near out of the woods. I think there’ll be another bunch of down days. With this in mind, and sticking with my philosophy of taking profit, I sold this LEAPS.  I received a premium of $18.50. In just 4 months with a $13,500 investment I sold this position for $18,500. That’s a Rate of Return of 37% in 4 months. This is the power of LEAPS.

12/2/19 – Buy to Open 10 WMT 1/21/22 $120.00 C @ $13.50 

4/7/20 – Sell to Close 10 WMT 1/21/22 $120.00 C @ $18.50

 Profit +$5000

Let’s say on Dec 2, 2019 I bought the 1000 shares of WMT. That would have cost me $118,000. If I sold today at $125 I would have made a profit of $7000. That’s a 5.9% Rate of Return. With me buying the LEAPS I invested $100,000 less than and made almost as much. For the last 4 months I used the $100,000 to make more money. LEAPS are a great way to leverage your money.

As I make money I’ll be investing in LEAPS and hopefully make a lot more gains when this market recovers. If you look at my “Active Trades/Current Positions” page you will see I already started buying LEAPS slowly. I say slowly because I’m only buying 1 or 2 contracts. When the market pulls back again I’ll be buying more of what I already own.

With this WMT trade you see a $5000 profit. I hope you’ll be seeing a lot more of these gains with my present and future LEAPS.

Successful Trading,

Steve

The Options Coach