Leaps

Personal Communication from fellow investor:

-can use TDAmeritrade using standard option transactions/leaps are available as per market makers.
-leaps are attractive when the premium (time value) is very low.
-can sell future calls early when stock price rises
-can sell a portion and save some to hedge rise/risk/profit taking
-try not to keep any call or put options with fewer than 90 days to expiration, because the time value decay starts to occur rapidly,
-Don’t sell puts or calls, but if you do, only sell 90 days or less, precisely because of the time decay factor.

-basic strategy:
--se Value Line to identify securities with strong fundamentals and good 12 month appreciation potential
—this helps to be confident during falling markets and to avoid panic selling.
-Value Line ranks stocks and picks decent ones in their Selection and Opinion section.
-Buy around 5-10K worth of shares of the underlying security, so that I can easily keep track of current price and gain or loss over time. I then leverage my acquisition by looking for reasonably-priced deep-in-the-money calls expiring at least a year in the future.
-If the security drops significantly on a “bad” market day or on minor earnings disappointments, do “cost averaging” with the options, not the actual stock, so when it recovers I can catch leveraged returns on the “bounce.”
-The key here is that you MUST be able to have a lot of faith in your investments to hold on in bad markets—that is why you use Value Line.
-you will be burned without doing diligent research,
-With Value Line, you don’t need to re-invent the wheel since the due diligence has been done by a much respected institution (no, I don’t work for or invest in Value Line.)
-do this with between 10 and 20 securities for diversification