Out of My MasterCard LEAPS

I’m sorry for all the emails today, but I am reporting my trades.

2 weeks ago I bought a 1 contract LEAPS on MasterCard (MA). I bought the MA 1/21/22 $310 Call for a premium of $46.50. All of the payment stocks are up today so I decided to take a little profit. This position wouldn’t expire until January 2022 but I like taking profit. If there’s a little pull back I’ll be back in these LEAPS.

7/21/20 – Buy to Open 1 MA 1/21/22 $310.00 C @ $46.50

8/5/20 – Sell to Close 1 MA 1/21/22 $310.00 C @ $56.92

Profit +$1042

I was in this position for 2 weeks. Let’s take a look at why I like LEAPS so much.

Let’s make a comparison of buying the LEAPS and buying the stock.

When I bought this MA LEAPS the stock was at $311. I bought 1 LEAPS for $46.50. This cost me $4650. If I bought 100 shares of the stock the cost would be $31,100. The investment into the LEAPS cost me a lot less.

Now let’s take a look at the result of each trade. When I sold my LEAPS position the stock was at $328. The stock is up $17 from when I bought the LEAPS. If I bought the stock I would be up $1700 on my $31,100 investment. That’s a Return of Investment (ROI) of 5.4%

I bought the 1 contract of the LEAPS, which is equal to 100 shares. I profited $1042 on an investment of $4659. That’s a ROI of 22.4%

If you buy the stock you make a 5.4% ROI and buying the LEAPS you make 22.4% ROI. Yes I would have made more money if I bought the 100 shares, but it’s all about the Return on Investment. If I invested the entire $31,100 into LEAPS my ROI would still be 22.4% but the money return would have been $6969.

I hope this explanation shows the power of using the leverage when buying LEAPS Options.

Any questions on LEAPS send me an email.

Successful trading,

Steve

The Options Coach