LEAPS Entry Criteria

Use this checklist before considering any LEAPS trade.

What is a LEAPS option?
LEAPS (Long-Term Equity Anticipation Securities) are standard stock options with much longer expirations—typically 1 to 3 years. They behave more like the underlying stock, provide long‑term exposure with less capital, and experience slower time decay compared to short‑dated options.

1. Stock Must Be in ⁠✅approved-wheel-stocks
Only consider LEAPS on names already vetted and listed in the approved stocks list.
2. Technical Setup

Prefer price at or near the lower Bollinger Band for entry on the daily timeframe.

For high beta stocks (β above 2.2), mid-Bollinger Band entries are acceptable.

MUST NOT be at the lower Bollinger Band because of bad earnings. If so, DO NOT TRADE.
3. Market Condition
VIX must be 15 or higher before initiating any new LEAPS position.
4. Option Duration

Buy call options with at least 365 days until expiration.

I typically go 400+ days to be safe.
5. Strike Selection
Choose call options with 70+ delta for stronger correlation to the stock movement.
6. Position Sizing

No more than 10% of total portfolio allocated to LEAPS.

No more than 33% of the LEAPS allocation in any single ticker.
7. Avoid Earnings

LEAPS during earnings is a 50⁄50 gamble.

Not worth the risk unless you are committed to holding long term.

I choose to avoid earnings at all costs.

EXIT CRITERIA

10–20% ROI in 7 days or less → EXIT
20–40% ROI in 4 weeks or less → EXIT
Manage before 90 days until expiration if planning to hold longer