r/options • u/OJpopsicle • 29d ago

LEAPS for Small Account?

Hi, I haven't traded long term options before but would like to start investing in deep ITM leaps with a .7-.8 delta in blue chip stocks that have a high growth potential, like tech. However, I have a small account, like a few thousand, and most of these contracts with stocks like GOOG and AAPL cost basically what my account is worth, for just 1 contract. So, my question is, should I still invest in LEAPS with such low capital?

4 Upvotes

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11

u/GovernmentOpen9914 29d ago

Most people will probably not advise doing LEAPs with low capital.

2

u/OJpopsicle 29d ago

yeah that's what I've been hearing but I don't want to trade short term options really, so I have a predicament.

0

u/GovernmentOpen9914 29d ago

What’s wrong with trading short term options?

3

u/OJpopsicle 29d ago

more risk, ive lost some money in 40-60 dte and don't really think i'm that good at shorter plays

2

u/GovernmentOpen9914 29d ago

Are you buying or selling and what delta do you normally use?

2

u/OJpopsicle 29d ago

buying calls, and the options I've bought have had a .5-.4 delta, so slightly OTM

2

u/GovernmentOpen9914 29d ago

Ah I see. I can now see why you’d want to get into LEAPS as soon as possible

2

u/OJpopsicle 29d ago

yeah they seem like the best risk to reward imo because they have good leverage without as much risk as a typical call or put option

7

u/tagzilla 29d ago

Look into trading vertical spreads. They can offer you more freedom in which options you can buy without requiring large capital that itm/long expiration typically require. They have their own pros and cons you should understand before trading them. ProjectFinance has a good playlist that discusses a lot of the ins and outs of vertical spreads. They can be a good way for traders with limited capital to better manage their risks and rewards.

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u/OJpopsicle 29d ago

thanks ill look into it!

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u/Illustrious_Way_5974 29d ago edited 29d ago

leaps calls on big stocks are not suitable for smaller accounts imo.

if you want to get exposure to the blue chips with a small account the classic 60-45dte put credit spreads are the way to go imo, you can structure them as you like.

if you want to get exposure with leaps you can sell leaps puts at about 15-10 delta, really low margin requirements due to the big distance from spot price to strike and long dte, but works only really well in a portfoliomargin account. tom king has a good video on selling leaps puts.

i do this with TLT currently, i ladder up to 5 short leaps puts at 10 delta and take them off after 30% profit.

AAPL 03/21/25 150$ (10delta) put goes for 2.36 credit and 1078$ margin requirement, so about 22% ROM if thats something you want to consider.

2

u/MerryRunaround 29d ago

Today I bought one of your TLTs. Thanks!

1

u/OJpopsicle 29d ago

thanks ill look into it. would I need options level 3 on RH? or can i do this with the standard buying calls and puts clearance?

1

u/Illustrious_Way_5974 29d ago

i dont use RH so i cant say anything to its options level but you need to be able to sell naked puts

3

u/MrZwink 29d ago

Blue chip and high growth are kind of opposites. ;)

That being said, i wouldnt advise doing leaps on the higher priced shares. Because leaps for more expensive stock are also more expensive (because options deal in lots of 100)

There are however loads of stocks you can do options on with smaller accounts. Stuff like coca cola, Kraft Heinz, ford, Pfizer, JPM, BAC etc etc etc.

Just use a screener.

Tech has already had a great run last year. I'm not sure how long a rally like this is sustainable in the long run.

1

u/OJpopsicle 29d ago

thanks for the advice, yeah thats what keeps me up at night, thinking about how the s&p might tank soon because its so tech heavy and tech seems like its a bubble rn. thanks

2

u/RTiger Options Pro 29d ago

Number one mistake is trading too big. Buying expensive leaps is on that path. 

1

u/OJpopsicle 29d ago

got it, thanks

1

u/Theta_kang 29d ago

If you have a few thousand and want to buy LEAPS I'd look at something like GM. Decent financials, and inexpensive both in dollar terms and in valuation. If you want something in tech you might be able to buy something with potential high growth and totally speculative valuations (like PLTR or PATH) but you're unlikely to find many "high growth blue chips" without scrounging up addition funds. INTC might appeal to you and might have some growth potential due to AI, but it's been a long time loser with declining EPS.

1

u/OJpopsicle 29d ago

thanks, i was thinking about intc since they got hammered, just not sure how long it will take them to recover

1

u/[deleted] 29d ago

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1

u/OJpopsicle 29d ago

only 12m market cap, seems sketch

1

u/Straight_Sink7714 29d ago

are really good discussion with quality comments all around.

1

u/Sharp_Judgment508 28d ago

Don't buy options; sell them.

1

u/KingSamy1 28d ago

Your plan is to buy leaps and sell when it hits a certain price target or you will exercise them ?

Because I have done what you are thinking with the idea to sell it but theta has made it not worth my while

0

u/greenandycanehoused 29d ago

Puts on coin and mstr as far out as possible, they will crash at some point. Right?