how to invest with LEAP options

Author

Pete Tan
May 06, 2026

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Got a few DMs this week from members asking how I think about LEAPs.

They have made me serious money over the years. They have also taught me some of the most expensive lessons of my trading life.

So here is the playbook I actually use. No theory. Just rules.

📚 Quick refresher first

A LEAP is just a long dated call option, usually one to two years out. You pay more for the time, but you get more time to be right. Think of it as buying a stock you love, with leverage and a deadline.

🎯 10 rules I live by when I’m buying LEAPS

  1. Only buy LEAPs on stocks you actually want to own. If you would not hold the shares for years, you have no business holding the option. Conviction is what stops you panic selling on a red week.

  2. Always go at least one year out. Time is the whole point. Anything shorter and theta is eating you alive before you even start.

  3. Buy at support. Not at resistance. The best entries come when a quality name pulls back to a key level or gets oversold. Chasing breakouts is how you overpay for options.

  4. Never buy LEAPs into earnings. IV crush will kill your position even if the stock moves your way. Wait for the dust to settle, then enter.

  5. Size it like you are going to be wrong. I don’t hold more than 30% of my portfolio in LEAPs combined (unless extreme situations). Leverage cuts both ways. Treat every position like it could go to zero.

  6. Match the strike to your conviction. Deep in the money for safety. At the money for leverage. Slightly out of the money for asymmetry. Pick what fits your view, not some random tweet you read.

  7. The stock does not need to hit your strike. A LEAP can double in value long before the strike is touched. Feel free to take profit before that.

  8. If the thesis is intact, hold. Do not cut a winner just because you are up 50%. The biggest LEAP wins come from patience, not from itchy fingers.

  9. Watch the calendar as expiration nears. Deep ITM with 90 to 120 days left? You have options. Close, or roll. Do not wait until the final month to figure out your plan.

  10. Journal every single trade. Why you entered. Your target. What would make you exit. When the trade is down 40% and your gut screams sell, the journal is what keeps you calm and collected.

Pete's Take 👇 LEAPs are the most powerful tool in the options box if you use them with discipline. Without it, they are just expensive lottery tickets. The difference is not skill. It is patience.

This is the short version. Inside Stock Market Genius we go a lot deeper, real trade walkthroughs, how to size LEAPs across a full portfolio, and when to roll versus close.

If you want the full options playbook 👇 Join SMG as a member!

Stay sharp. 🙏 Pete

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Pete
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🚨‼️ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any “Pete” messaging you, these are scammers impersonating me. Pls beware!

The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.