If You’re Buying LEAPs Options in Lieu of Stock – STOP NOW!

not-too-late-to-improve-your-trading-skills-300x219I’m disheartened this morning. We just got an email from a long-time customer, Let’s call him John,  about fixing a position he’s in. You owe it to yourself to understand his situation so you can learn from his mistakes.

Back in October 2015 he bought a call leaps options on AAPL.

He didn’t buy the stock.

I don’t think he bought a put option for protection.

I’m not sure why he would do this! He’s been to almost 50 of our free webinars. That’s right… 50. He’s not alone… there are many of you out there that come to our free webinars week in and week out. But… how did we not communicate the danger of buying unprotected leaps options? What are we doing wrong? How could anyone sit through 50 of our RadioActive Trading webinars and still purchase leaps options in lieu of stock and put option protection?

If you are doing this too… please reconsider!!

Didn’t the guys at compound your stock earnings get sued over this?

Buying long options is SPECULATIVE! It’s a gamble! You are fighting the loss of time value and you are fighting the leverage against you if the stock declines.

Here we are about 6 months later and John is panicking and trying to figure out how to fix his position… if you haven’t been following AAPL stock.. it’s down. It’s not down a ridiculous amount over the last 6 months.. but it’s down… Depending on when in October he bought in, the price of the stock was between $108 and $120 per share. His leaps option was purchase for $14 per contract… now it’s trading at a little over $1.

That’s not a typo…. that’s not a $10… It’s a $1.

Whats’ worse?? He traded WAAAYYY  TOOOO MMAAAANNYYY contracts. Like 120 of them. So now John is looking at trying to repair a $160,000 loss. That’s over a 90% drop.

Do yourselves a favor… make sure you consider the leverage that you might be using in the options market. Leaps options prices can drop 90% if the stock drops 20%.

The safest way to participate in the market and the safest way to insure that you will be able to preserve capital and profit over the long-term is to buy stock and protect it with put options. If you are buying call options in lieu of stock because you can’t “afford” stock… then consider getting out of the market altogether… save up some capital. Purchasing options because you are broke is GAMBLING… NOT INVESTMENT.

Our Blueprint gives you an easy to use plan to invest in the stock and options markets with safety. Please get it if you are in the market at all. Please DON’T come to all of our webinars and think that you will be able to “figure” it out. Entering the market with an incomplete plan is DANGEROUS.

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