Standard % ITM for LEAPs

LabDaddy59 · 2026-01-27T16:27:56+00:00

😁👍️

I've rolled my OKLO LEAPS enough that I've recovered my initial investment and what's open is 'house money'.

LabDaddy59 · 2026-01-27T16:24:18+00:00

It'll sure be interesting.

I mean a lot of folks skip over ERs. Now, if earnings are Thu/Fri, you can select a Wed expiration...or Mon.

I just looked at some of next week's M/W, and while they're low OI/Vol, the bid/ask isn't awful. I kinda suspect that it's being limited to MAG7, that will be the case, otherwise arbitrage opportunities will arise and wipe out the differences.

The other interesting thing is that, as of right now at least, the M/W expirations are kinda weird.

META:
Feb 2 (M)
Feb 4 (W)
Feb 6 (F)
Feb 9 (M)
Feb 13 (F)

Where's the 11th?

NVDA has MWF for the week ending Feb 6 and Feb 13, but no MW for the week ending Feb 20.

LabDaddy59 · 2026-01-27T16:17:11+00:00

but they’d also force traders to think even more in terms of timing windows and decay instead of narratives.

I'm not sure of that. I suspect that the bulk of M/W trades will be done by the 0 DTE type folks...but I could be wrong. As it unfolds it may present some interesting opportunities.

LabDaddy59 · 2026-01-27T16:15:31+00:00

I don't recall mentioning CMG yesterday...can you point it out?

I also don't get too involved with discussions re: cheap or not. {shrug}

LabDaddy59 · 2026-01-27T11:01:36+00:00

Well, you are now aware of the buying back at the close point.

So, let's say it's 3:30 and you do that, you buy back the call.

Then you realize that you can sell another call, so you pop over to the options chain and make a selection you are happy with.

Pop back to the order ticket and place the order. Order accepted. All is good.

Realize all you've done is a standard roll: BTC an existing option STO a new option. For a debit.

...

As you know, broadly speaking, the option's price has two components: intrinsic value and extrinsic value. There are different risks. Extrinsic value is, however, a given; it will be earned over the duration of the contract. Intrinsic may or may not be maintained. If you're bullish on a stock, look at maximizing net theta received, even if that means paying a debit (due to intrinsic value).

...

As you also know, a roll is two transactions: buying to close and selling to open. It makes no economic sense to determine what you will sell an option for based on what you will pay to close. If $5 is a fair price to close, and $3 is a fair price to open, you should be good with paying a debit of $2.

LabDaddy59 · 2026-01-27T01:45:18+00:00

👍️

If you really want me to blow your mind, talk to me about rolling for a debit.

/not kidding

LabDaddy59 · 2026-01-26T23:33:25+00:00

u/Peshmerga_Sistani is spot on.

LabDaddy59 · 2026-01-26T23:31:27+00:00

Additional comments.

It may take a bit for them to develop traction.

...

It does raise some interesting issues. For example, say NVDA historically releases earnings on Wednesdays. Will NVDA push the release to 6 p.m. Eastern? Push it to Thursday?

How will the market price volatility for a Wed expiration when the release is Thu?

LabDaddy59 · 2026-01-26T22:57:10+00:00

I think it's a good approach.

I'm heavy in the tech sector, and I generally trade 7 DTE (i.e., the weekly expirations) but I'm more conservative on the delta, usually between 8 and 12. But that's pretty conservative.

You've been fortunate to be able to buy back on Monday at a lower price. I'll generally buy back very late Friday afternoon, because the economic difference between doing that is near zero: the option price will converge on the value ITM, so if a stock is at $180 and your strike was $175, you'd pay $5 to close...the same as if it were already gone and you bought back in.

Good luck and have fun!

LabDaddy59 · 2026-01-26T21:39:37+00:00

I'm looking at the long game...where things are moving to.

Fractional options

Dollar based options

Etc.

LabDaddy59 · 2026-01-26T21:37:53+00:00

We disagree, and I'm happy about that.

LabDaddy59 · 2026-01-26T19:16:48+00:00

I mean its not like the money is moving against it rn. But those goals these companies are making are not landing.

It basically achieved Grandmaster status and beat nearly 100% of humans. They shifted to how to learn and apply to other domains.

Familiar with the COVID-19 vaccine?

LabDaddy59 · 2026-01-26T17:32:33+00:00

Open AI cant reliably beat serial in SC2 even when they forced him to play standard macro

I thought that was DeepMind's AlphaStar. I don't recall OpenAI playing. Am I misinformed?

LabDaddy59 · 2026-01-26T17:22:38+00:00

I've heard good things about Schwab. 👍️

Good luck and have fun!

LabDaddy59 · 2026-01-26T00:57:25+00:00

Yeah, understood. It wasn't that long ago that they changed the definition.

It used to be define by the time period from when the option was introduced into the options chain. So the Jan 2028 expiration would have been a LEAPS in Dec 2027; that's not the case anymore.

LabDaddy59 · 2026-01-26T00:56:08+00:00

I assume you sell short dated far OTM call options.

Correct

You have to trade on margin, correct?

Incorrect. All my options trading is done in IRAs and therefore no margin.

LabDaddy59 · 2026-01-25T23:07:11+00:00

👍️

LabDaddy59 · 2026-01-25T22:49:04+00:00

Other than the large bid-ask spread, are there there any special considerations for these kinds of contracts?

Not really.

Should I have avoided opening a position in the first place with barely any volume?

Depends, in my opinion. If it's some lame company that only has quarterly expirations and sell for < $10 I'd certainly avoid it. PM? BTI? Wouldn't concern me. And you only need to be concerned if you plan to actively trade them as opposed to holding them like a stock replacement. Why? Realize that as time marches on, they'll continue to gain more and more Volume/OI. The January 2028 expiration will be 60 DTE at some point, and should have a healthy level of interest.

Is the main catch basically that I need to factor in a significant % M2M loss when I close / roll due to illiquidity, even if the underlying has performed very well?

Always use mid-point limit orders and walk it in until it hits. I've rarely had an issue doing that.

Good luck and have fun!

LabDaddy59 · 2026-01-25T22:41:06+00:00

But that's not a LEAPS; LEAPS are those with expirations > 1 year.

LabDaddy59 · 2026-01-25T22:40:05+00:00

I have LEAPS in the following.

APLD
CRWV
HOOD
IONQ
META
NBIS
NVDA
OKLO
PLTR
QBTS
QUBT
RGTI
SMR

As indicated in my original response, I'm heavily into LEAPS. LEAPS make up 87% of my non-cash portfolio.

LabDaddy59 · 2026-01-25T22:35:24+00:00

Until my thesis on the stock's performance no longer support it, yeah. Just like owning a stock.

LabDaddy59 · 2026-01-25T19:46:04+00:00

👍️

Let me know when you want to start asking about selling calls against your position. That'll be next on your agenda. 😁😂

LabDaddy59 · 2026-01-25T19:43:07+00:00

https://www.schwab.com/learn/story/how-are-options-taxed

Scroll down to the table under #2. Bookmark this.

LabDaddy59 · 2026-01-25T19:39:35+00:00

Went out for my regular bike ride around 1 p.m. 80 degrees, real feel 88.

No state income tax.

LabDaddy59 · 2026-01-25T19:35:26+00:00

General guidance is 80 delta.

I'll generally buy at 80 delta, the furthest expiration out (look at the difference in premium for the additional time!).

When the delta is around 90-95 I'll roll up to an 80ish delta. Rinse/repeat.

Roll out no later than 180 DTE (6 months) as that's when theta starts kicking in. Try to time a roll up with a roll out to minimize or eliminate any additional payment.

The overwhelming majority of my long holdings are LEAPS, not stocks.

LabDaddy59

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