what's happening life gainers back in here with another stock building financial building video
trying to help you all navigate these murky waters of financial stability and this video is going to
be about doing leaps a great strategy for someone who wants to get a stop don't want to pay for a
400 shares of the stock but you believe in a company long term if you're finding me for the
first time please subscribe to the channel be sure to turn on notifications so when i drop videos you
get them bear with me people i'm trying as hard as i can to run both youtube channels
and keep these tips that are probably more important than what i do on my big channel here
because you guys are making those gains in your finances so i'm gonna give you guys a scenario
okay let's just say that you see a stock that you love or you believe is gonna go up
or you find a stock that's highly undervalued like carnival cruise it's undervalued right now
and we know that once we can get our hands around corona it's probably going to go back
up in value to some degree and you 100 shares but you can't afford 100 shares
well i've got the solution for you it's called a leap option contract now what is a leap
option contract ladies and gentlemen the term leap just simply stands for long-term equity
anticipation security so basically what they're trying to say is you're just going to buy a call
that lasts that extends at the very least 12 months and can go even longer than that but
here's the clinical definition what are long-term equity anticipation securities long-term equity
anticipation securities are publicly traded option contracts with expiration dates that are longer
than one year and typically up to three years from issue date they are functionally identical to most
other listed options with the exception longer times until expiration with all option contracts
a leaps contract grants a buyer the right but not the obligation to purchase or sell depending
upon the option is a call or put respectively the underlying asset at the determined price
so that is your clinical definition of elite now let's just take you in here and show you
an example of one so if i was going to do carnival well let me just take you here and show examples
of ones i've already done all right so i got a leap on sofi as you can see it doesn't expire
to 2024 and i've got a leap on hymns that doesn't expire till 2024 because i believe both of these
stocks are going to take off and the cheapest one of the group is this one right here called hymns
and you can see you know the contract cost me 470 bucks because remember one contract is a hundred
shares and then you basically multiply that by a hundred so it cost me 470 i'm already up 80 bucks
that's the power of buying them but ladies and gentlemen there's a strategy that goes deeper than
just seeing a stock that you like and just buying it you also got to pick the right strike you got
to look at one particular greek and let me go to carnival so i can explain that in greater detail
so here we are with carnival cruise right and if i believe that this is going to go up
over the next couple of years and i want to buy a hundred shares and hold it you would come in here
you pick buy a call and you pick the expiration date as far out as you can afford it okay
so i'm going to pick january 29 january 19 2024 the secret to picking the correct position
is when you click on this thing you see this little thing down here that says delta what is
the delta basically it's the change that's going to happen whenever a stock goes up by a dollar
so example right now carnival cruise is 23.72 if it goes up by a dollar and you own this contract
for you it's going to be one dollar it's going to be that exact price with 66 so basically every
time a stock goes up by a dollar and you own a contract you add whatever this delta is so you
know 66 times times 6.66 times 100 you do the math but the delta you are looking for is something
around point 90 so that means you're going to be way down here deep in the money so you're just
going to scroll down and as far as they'll let you go is here so on this stock the the lowest
you could get to is 89 on your delta why did you do that because when you're that deep in the money
you already have intrinsic value on the stock meaning that if it was to go crazy the wrong way
you can get out and still have some value in the stock so whenever you're going to be doing these
leaps ladies and gentlemen you want to get deep in the money and you remember it's below the strike
the share price we're down here looking at 12 you're deep in the money and now it just hit 90.90
and so if you needed to get out of this stock let's just say the worst thing has happened in
the marketplace you've already got some intrinsic value you can jump right on out of this thing and
know that you haven't lost really any money and so ladies and gentlemen that is the power of leaps
and that's why i highly encourage you if you're planning to buy a stock anyway use this leap
strategy and just sit on it now mind you you can always get out of these stocks ladies and
gentlemen before the expiration date so in some cases you might make a thousand dollars
before the expiration date comes and if you want to get out the stock let me take you
in one of mine all you would simply do is just exercise your way out so you see where it says
sell to close that's all you would do click review and you can get out of it um i think
that a lot of people have felt as though that once you get into a next once you get into a contract
you are stuck having to wait to that that contract expires no use your power and exercise
it and let me show you one more example of one that i like which is bank of america
the banks are making a huge resurgence and you might as well get you some of that in
your portfolio so you're going to come over here you're going to buy a call and you want to
shoot this thing out as far as you can go there you go and then just scroll down here and
look for a delta that is close to 0.90 that's not close enough for me um 89 is good so i would do 89
and this is the one you want to get now mind you ladies and gentlemen if you had to buy
100 shares of bank of america at this price you'd be paying 4 300 some odd dollars already
versus using the leap strategy and if you do this with a 0.88 or 0.90 delta
you're only going to be paying 1700 for the stock to control 100 shares which basically allows you
to get the same privileges you would if you spent the whole four thousand three hundred dollars
to get to stop so ladies and gentlemen this is another one of the secrets that great investors
use to leverage risk and maximize their finances and i hope this strategy can help you guys as well
that's going to do it for this video don't forget to like the video please comment subscribe
get yourself that life game start using leaps in your investing strategy my people
it's gonna help you return more money on what you put into it and until that net sex is hell video